The Rise of Home Equity Utilization: How More Homeowners Are Taking Advantage

After a long decline that began in 2009, home equity lines of credit (HELOCs) and other equity-based financing options are making a strong comeback. According to a recent article from Bankrate.com, HELOC originations surged in Q4 2024, marking growth for the 11^th consecutive quarter. Homeowners are now tapping into their built-up equity at the highest levels since the Great Recession of 2007-2009.

So, what’s driving this renewed interest, and how can borrowers take advantage?

The Equity Boom

Equity grows in two ways. First, every time a mortgage payment is made, a portion goes toward interest and other costs (like property taxes and homeowners’ insurance), while another portion reduces the principal balance. This gradual paydown increases a homeowner’s equity over time.

The second way equity grows is through appreciation. Since 2020, U.S. home prices have surged by 47%. Real estate data firm ATTOM recently noted that nearly half of homeowners nationwide are considered  “equity rich”, meaning their remaining mortgage balance is no more than half the home’s total value.

This rise in appreciation has created a financial cushion that can be strategically accessed without having to sell the home.

The Lock-in Effect

Another factor contributing to the renewed interest in home equity borrowing is the lock-in effect. This refers to the hesitancy of homeowners who purchased or refinanced during the period of historically low mortgage rates to sell or give up their rate in favor of today’s higher interest rates.

That’s where home equity products come in. They offer flexibility, access to funds, and the ability for borrowers to keep their existing first mortgage rate.

Common Uses for Home Equity

In general, home equity loans and cash-out refinances tend to offer lower interest rates and more manageable monthly payments than credit card debt or personal loans. In addition, interest paid on home equity loans may be tax-deductible, unlike other consumer debt. Homeowners can take advantage of the low-cost to borrow and use the influx of cash however they choose, or to improve their financial situation.

Homeowners can use home equity to:

Consolidate high-interest debt:

As of April 2025, the average credit card interest rate was around 22% according to the Federal Reserve Bank of St. Louis. Utilizing home equity to pay off these balances can lead to significant interest savings.

Pay off medical bills or student loan debt:

Rising premiums, deductibles and copays have made healthcare more expensive than ever. Utilizing cash from your equity may be a way to cover these costs and avoid hefty past due medical bills or collections.

Similarly, student loan debt continues to climb. According to the Pew Research Center, balances have increased by 42% over the past decade. For graduates or parents of college-bound children, the burden of decades of payments can be reduced or even eliminated by tapping into home equity.

Make home improvement or repairs:

Today’s homeowners are choosing to stay put much longer than in the past. Limited inventory, elevated home prices, and the desire to hold onto historically low interest rates have led to a surge in home renovations.

The Joint Center For Housing Studies of Harvard University noted in their latest LIRA report that annual expenditures on home improvements are expected to grow in 2025.

Investing equity into home upgrades not only makes living spaces more enjoyable but may further increase property value.

Finance an investment property:

Using a home equity loan to purchase an investment property can be a lucrative strategy. Rental income or profits from a flip may create opportunities to repeat the process and build long-term wealth.

Fund major purchases:

Analytic firm CoreLogic reports that the average homeowner in 2025 has approximately $311,000 in equity—offering the potential to access $100,000 or more in cash. Compared to the average credit card limit of $30,000, equity loans may offer a more cost-effective way to finance large purchases like a vehicle, wedding, or new business venture.

Home Equity Loan Options

MiMutual Mortgage offers a variety of ways to access equity and help homeowners better meet their financial goals:

Cash-Out Refinance:
With just one monthly mortgage payment to manage, this is a good option for homeowners looking to refinance their existing mortgage while taking out a lump sum of cash at the same time.

Home Equity Loan:
This stand-alone second mortgage allows homeowners to borrow against their equity while keeping the existing first mortgage in place. There are no changes to the original repayment term or interest rate.

Home Equity Line of Credit (HELOC):
A revolving credit line that can be drawn from as needed, typically over a 10-year period. Interest is charged only on the borrowed amount, and as repayments are made, available credit is replenished.

Is It Time To Tap?

For homeowners looking to make the most of their financial resources, tapping into home equity can be a powerful tool. Whether the goal is to renovate, consolidate high-interest debt, or build financial flexibility, MiMutual Mortgage provides the expertise and options to support the journey.

To learn more about how MiMutual Mortgage can help, contact one of our Loan Officers today.