Using your equity.
Your house is probably your largest asset. Getting at it sensibly is a different question from getting at it at all.
Not sure where you stand? Start with an automated estimate of what your home is worth, then subtract what you still owe.
What equity actually is
What your home is worth, minus what you still owe on it. It grows two ways: you pay the balance down, and the market moves the value up. Work out roughly where you stand.
Equity is not cash you can take out
Lenders cap how much of your home’s value a loan can represent. So if you have built up a large amount of equity, you will typically be able to access some of it — not all of it. The gap surprises people, so it is worth understanding before you make plans.
What people use it for
- Consolidating higher-interest debt. Mortgage debt is normally the cheapest money available to a homeowner. The catch is real: you are converting unsecured debt into debt secured by your house.
- Home improvements. Particularly work that adds value back. A renovation loan may fit better if you are buying the house and fixing it at the same time.
- Education, a business, or a large one-off cost. Sensible for some people and a bad idea for others. A loan officer who is willing to tell you it is a bad idea is worth more than one who is not.
Be clear-eyed about this one. Consolidating credit cards into your mortgage lowers your monthly outgoings and stretches the debt over a much longer period, which can mean paying more in total. It also puts your home behind debt that previously was not secured against it. We will show you both sides in writing before you decide.
Home equity rules by state
Most of what is on this page is true anywhere. A few states write their own rules on top, and in one case those rules sit in the state constitution.
Texas — the only state with home equity rules in its constitution. An 80% cap counting every lien, a twelve-day waiting period, one loan at a time, one per year, and no personal deficiency judgment. If your property is in Texas, read this before anything else.
Florida — no borrowing cap, but your spouse must join in the mortgage even if they are not on the deed, two state taxes land at closing, and condominium lending has tightened sharply since Surfside.
Illinois — no cap either, but a property tax bill among the heaviest in the country does the limiting instead. Worth checking your assessment and your exemptions before you apply.
Find out what you qualify for.
A licensed loan officer reviews what you send and tells you where you stand, in writing. No cost, and no obligation to go further.