If you’ve been paying off your mortgage for years, chances are you have built up excellent equity. After all, building equity is one of the biggest benefits to owning a home. Did you know you can tap into that equity? We’re breaking down all the ways you can utilize your home equity to improve your financial circumstances.

How to Use Your Home Equity Wisely?

According to the Home Equity and Underwater Report for the second quarter of 2024, 49.2% of mortgaged homes in the U.S. are equity-rich. This means the outstanding loan balances on these homes are less than half of their estimated market values.

Not surprisingly, it’s common for homeowners who are equity-rich to ask questions like, “How can I use my home equity to my advantage?” “What do most people use home equity for?” “How do I get the most out of my home equity?” and “How can I make money from my home equity?” The answers come in varied forms, and what might work best for you depends on your circumstances.

Pay Off High-Interest Debt

Data collated by the Consumer Financial Protection Bureau indicates that the average annual percentage rate (APR) on credit cards increased from 12.9% in 2013 to 22.8% in 2023. In December 2024, this number stood at over 23%.

On the other hand, the average home equity loan rate currently stands at less than 8.5%. Given that credit cards typically attract much higher interest than home equity loans, it might make sense to use the latter to pay off the former. This can also be the case if you’re paying off a high-interest student loan.