Smart ways to use home equity

Use equity to remodel or improve your home

This is one of the most common equity strategies—especially in neighborhoods where updating kitchens, baths, flooring, and outdoor living space can improve both enjoyment and resale appeal.

Popular Metro Phoenix projects:

• Kitchen and primary bath updates

• Flooring + paint refresh

• HVAC replacement (big in our climate)

• Roof work + insulation improvements

• Outdoor living upgrades (patio, pergola, turf, landscaping)

Tip: If your goal is resale value, focus on improvements buyers consistently notice: clean finishes, functional layouts, updated systems, and a well-kept exterior. Please call me before you invest in remodeling or improvements for selling! We want your investment to be well-placed for the highest returns.

Use equity to pay off other debt (debt consolidation)

Homeowners can use equity to pay off credit cards, personal loans, or auto loans. Done correctly, it can reduce interest costs and simplify monthly payments.

When it can be a smart move:

• - Your current debt has high interest rates

• - You have a clear payoff timeline

• - You’re committed to not rebuilding the debt again

The big caution: This turns unsecured debt into debt tied to your home. If you can’t repay, your home is at risk. For some households, the “math” works but the habits don’t—so the strategy only works when paired with a real budget plan.

Use equity to help pay for your kids’ college

Equity can help cover tuition or reduce the need for higher-cost borrowing, especially if you have a defined plan to repay.

Common approaches:

• - HELOC for flexibility (pay per semester)

• - Home equity loan for a known total amount (fixed payment)

• - Cash-out refinance for larger funding needs (depends on overall mortgage strategy)

A responsible rule of thumb: Education is important—but housing stability is foundational. If tapping equity would strain your monthly cash flow or remove your emergency cushion, it’s worth slowing down and exploring other options.

Use equity to buy your next home before selling

Equity can sometimes help homeowners move first—especially when timing matters (job changes, school boundaries, downsizing, or needing a single-story home).

Commonly done with a HELOC or other bridge-type approach through a lender.

Key question: Can you comfortably carry two housing payments temporarily if the current home takes longer to sell? If not, we plan a safer timeline.

Use equity as a safety net (carefully)

Some homeowners open a HELOC while income is stable, then keep it unused as an emergency option. This can be helpful because qualifying can be harder during a transition.

Boundary that keeps this smart: treat it like insurance, not spending money.

Use equity to buy an investment property (rental or second home)

This is one of the most popular “wealth building” uses of equity. The most common strategy is using equity for the down payment, then financing the investment property with its own mortgage.

Ways this typically works:

• - HELOC for down payment + separate loan for the investment property

• - Home equity loan for down payment (fixed payment)

• - Cash-out refinance to create a lump-sum down payment pool

What Phoenix-area buyers should consider:

• - Total monthly payment (including the equity loan/HELOC payment)

• - Cash reserves for repairs and vacancy

• - Insurance, HOA rules, and rent readiness (if you’re buying in an HOA community)

• - Long-term plan: hold for cash flow, appreciation, or future use