Smart ways to use home equity: How you can use it to sell

If you’ve purchased a home before, you’ve made a smart choice. Real estate is one of the greatest financial assets for building wealth. According to research from CoreLogic, a property data analysis company, homeowners in North Carolina gained around $25,000 in equity between the summers of 2023 and 2024. Today’s homeowners are “equity rich,” meaning they have a high-value home paired with lower mortgage costs, resulting in positive home equity that can be used to their advantage.

In fact, if you’ve built up equity over the years, you can use it strategically to sell your home. Use your equity to make your home more marketable, cover selling costs, or even fund your next home purchase. Here’s what you need to know.

It’s helpful to think of home equity in simple terms: it’s the current market value of your home subtracted by what you still owe on your mortgage. As you pay down your loan and as your home appreciates in value, your equity increases.

You can borrow against the equity you have in your home using such options as home equity loans with a fixed rate, a Home Equity Line of Credit (HELOC) that is a revolving line of credit, or a refinance. Consider working with a local lender like Towne Mortgage of the Carolinas or North State Bank to get the best service for your needs. You can also talk to them about your goals to determine the right option for your situation.

If you’re looking to sell your home, there are several ways you can leverage your home equity to ensure you sell your home for a maximum profit. Here are a few ideas to help you get started.

You can use your equity to make targeted upgrades — like a kitchen refresh, updated bathrooms, or curb appeal enhancements. Some of these updates can increase your home’s value and attract more buyers. Even minor renovations can yield a strong return on investment.

Before you get started, it’s smart to talk to an experienced real estate agent to determine what makes the most sense. While a full kitchen remodel likely won’t get you the return you want, a great real estate agent will guide you through wise improvements that will maximize your profit.

Selling a home comes with expenses. From real estate agent commissions, staging your home to sell, repairs that may pop up during appraisal, and closing costs, those numbers rack up fast. If your equity is substantial, tapping into it can help cover these costs without straining your cash flow.

Make sure you talk to your mortgage lender and agent for guidance before you make this decision so you can act wisely.

If you plan to purchase another home after selling your current one, you could use a portion of your equity to pay down outstanding debts. Doing so can improve your credit score and increase your borrowing power for your next mortgage.

You can start to see improvements in your credit score in as little as 30 days if you pay off existing debts to keep your credit card utilization under 30 percent. Consolidating that debt can help you move on to your dream home.

If you’re planning to buy a new home before selling your current one, a home equity loan or HELOC can provide liquidity for a down payment, giving you flexibility in your move.

Make sure you work with your lender or a financial adviser before you make this decision so you know whether this option is right for you.

Before tapping into your home equity, weigh the pros and cons. Think about how much equity you have versus how much you need. While the Triangle is currently a seller’s market, you’ll still want to work with an agent to determine market conditions and whether your home is likely to sell quickly. And think about whether there are alternative ways to fund improvements or cover selling costs before you tap into your equity.

The good news is that your home equity is a powerful tool that can make selling smoother and more profitable. Whether you use it to make strategic upgrades, pay off debts, or fund your next move, leveraging equity wisely can put you in a stronger position in the real estate market. Be sure to work with the local experts who can help you make the best decision.