8 creative ways to use your home equity right now
When it comes to borrowing money at an affordable rate, there aren't a lot of options right now. Over the last 18 months, the Fed's rate hikes have caused the borrowing landscape to become a lot more expensive, and that's true whether your goal is to buy a home, pay down your debt with a personal loan or borrow money for you or your child's education.
But if you're a homeowner, there is one potential way to borrow money affordably, and that's by tapping into your home's equity. And, right now, the average homeowner has about $200,000 in tappable equity, due in large part to the steady uptick in home values that has occurred over the last several years. So, if you're looking for a good source of funds, your home equity may be it — especially if you want to borrow at a decent rate.
And, what's great about tapping into your home's equity is that there are virtually no restrictions on how you can use the money. While many people opt to borrow against their home's equity to finance home improvements or pay off high-interest debt, unlocking the potential uses of your home's equity can go well beyond those common options. In fact, there are some unique ways to leverage your home equity for unconventional purposes right now — and in some cases, you could even see a big return on your investment.
Find out the top home equity loan rates you could qualify for here.
8 creative ways to use your home equity right now
Some of the more creative reasons for tapping into your equity include:
To create a sustainable haven
Eco-conscious homeowners can utilize their home equity to transform their property into a sustainable and environmentally friendly oasis. By investing in solar panels, energy-efficient appliances and green home improvements, you not only reduce your energy costs but also contribute to a greener planet.
This innovative approach combines financial well-being with environmental consciousness, as some types of green energy upgrades can qualify for tax breaks. For example, the Residential Clean Energy Credit equals 30% of the costs of new, qualified clean energy property for your home installed anytime from 2022 through 2032, according to the IRS — and there may be other state and federal tax credits you can qualify for, too.
Explore today's top home equity loan options here.
To pursue a passion project
Your home equity can serve as the ideal financial foundation for turning your passion project into a reality. Whether it's writing a novel, making a documentary or launching an artistic venture, the funds from your home equity can provide you with the freedom to focus on your creative endeavors. This approach allows you to explore your passions, potentially leading to personal satisfaction and even financial success.
To launch a new career or startup
If you've always harbored entrepreneurial aspirations, your home equity can provide the initial push to turn your dreams into reality. For example, you can use the equity in your home to fund your startup or new career endeavor. Whether it's a small business, a tech startup or a unique enterprise, the financial resources from your home equity can serve as a catalyst for launching and growing your innovative ideas.
To pay for legal fees
Legal challenges or lawsuits can be financially draining and emotionally taxing. Utilizing your home equity to cover legal fees ensures that you have the necessary resources to navigate complex legal matters while safeguarding your assets and interests — whether you're facing a divorce, a custody battle or something else entirely. And, this approach provides financial security and peace of mind during challenging times.
To transform your home
Rather than undertaking common renovations, consider using your home equity to embark on a significant transformation of your living space. Redesign your home's layout, incorporate cutting-edge technologies or add a home automation system to create a modern and luxurious living experience.
This unconventional use of home equity allows you to fully customize your home and enhance your everyday living environment. And, if you're lucky, it will add to the resale value if or when you decide to sell your home.
To finance your home office or workspace
In the era of remote work and freelancing, having a well-equipped home office or workspace is crucial. Using your home equity to create a customized, productive workspace tailored to your professional needs can significantly boost your work-life balance. Whether you're a writer, artist or remote worker, this approach helps optimize your productivity and professional growth.
To create an emergency fund
Life's uncertainties require a financial safety net. By tapping into your home equity to establish a robust emergency fund, you ensure that you have the financial resources to cover unexpected medical bills, car repairs or job loss. This fund not only provides peace of mind but also financial security during unexpected life events. And, if you don't have a fully funded emergency fund yet, it can be a great way to use your home's equity to ensure that you're prepared for whatever comes your way.
To fund a wedding, vacation or celebration
Major life events such as weddings, dream vacations or significant celebrations can be expensive. But your home equity can serve as a valuable source of funding to make these moments truly memorable. Whether it's a destination wedding, an extravagant vacation or a milestone celebration, your home equity can help you create cherished memories without compromising your financial stability.
The bottom line
Your home equity is a versatile financial asset that can fuel your creativity, provide financial security and enable unconventional ventures. While common uses like renovations and debt consolidation have their merits, exploring imaginative avenues for your home equity can lead to a more fulfilling and unique financial journey. When considering these unconventional options, just be sure to weigh all the factors, including the complexities and risks, associated with your innovative ventures.
