Owning a home isn’t just about having a cozy place to kick back; it can also be a valuable financial tool. If you’re a homeowner in Ohio, it’s time to ask yourself: Are you making the most of your home equity?

Here’s a quick crash course on what home equity is and the key things you should know about using it.

What is home equity, anyway?

Think of home equity as the part of your home you truly own. It's the difference between what your home is worth today and how much you still owe on your mortgage. The more your home’s value rises (and the more you pay down your mortgage), the more equity you build! 

Here’s a simple formula to estimate your home equity:

Current Market Value of Your Home - Outstanding Mortgage Balance = Your Home Equity

You can borrow against your home equity

Your equity isn’t just for sitting there looking pretty—you can put it to work with two main borrowing options:

Home Equity Loan: A lump sum with a fixed interest rate and regular monthly payments.

Home Equity Line of Credit (HELOC): A flexible line that works like a credit card, giving you access to funds as you need them. With a HELOC, you only pay interest on what you use.

Home equity is a great way to fund major life goals

There are tons of smart (and even fun) ways to use your home equity! Here are just a few:

• Remodel your kitchen or bathroom (say goodbye to that old-school tile!)
• Consolidate high-interest debt and save more each month
• Cover college tuition without panicking over student loans
• Plan an unforgettable family vacation to make memories that last
• Invest in smart home upgrades like solar panels or security systems
  
  

Rates are typically lower than other types of loans

Because your home secures the loan, rates are usually lower than credit cards or personal loans. That makes using your equity a smart move for bigger expenses! You can even search for home equity specials potentially offering no payment or reduced rates for a period of time.

The right option depends on your needs

Not sure if a loan or line of credit is better for you? A home equity loan might be ideal for a big, one-time project, while a HELOC could be perfect if you need flexibility for ongoing expenses. A home equity specialist can help you figure out what makes sense for your lifestyle.

Whether you’re planning for a big expense or just want to be prepared for what’s to come, Credit Union of Ohio can help you make the most of your home equity. Check today’s rates or apply now to get started!