Home equity remains one of the key financial advantages of homeownership. It’s how many homeowners build wealth and when accessed, it can provide funds for a range of uses.

According to CoreLogic, the average homeowner is now sitting on approximately $311,000 in equity. On average, each gained about $5,700 in equity in 2024, a 2.5% annual increase, though those gains weren’t uniform nationwide.

With today’s high home values, you might have more equity in the home than you thought. It could be the right time for a cash-out refinance.

In a cash-out scenario, a homeowner takes out new mortgage for more than the amount owed of the first mortgage. It’s a new loan with new terms, but you can use the extra borrowed cash to pay bills, remodel, or make other investments. You can consolidate high-interest debt such as credit cards, student loans or car loans.

The real reward comes in the form of interest. A refinance loan’s lower interest rates may be significantly lower than other forms of revolving credit. Some refinance borrowers can switch their FHA loans to conventional to get rid of mortgage insurance payments. Others may wish to convert an adjustable-rate loan to a fixed rate.

Closing costs for a cash-out refinance generally range from 2% to 5% of the loan amount, which is typically deducted from the cash payout.

To determine how much equity you have, subtract your mortgage balance from your home's current value. For example, if your home is worth $500,000 and you owe $300,000, your equity is $200,000. You can estimate your property’s value using online tools, researching local sales, or hiring an appraiser.

Leveraging your home equity with a refinance loan can be a powerful way to make your money work for you but should not be entered into lightly. Consider your options carefully with the help of a financial adviser. Mortgage refinancing can be a great decision, but it doesn’t make sense for everyone.

Call a trusted Bay Equity Home Loans branch for help! Our experts can determine how much of your equity you can tap, and what loan options you qualify for. The rate for a refi will vary based on each homeowner’s situation. Credit history, income, and home equity all count.