Ways to Access Your Home Equity

Equity is wealth, but it is not liquid. Turning it into money you can actually use always involves one of two moves: sell the home, or borrow against it. Every product on the market is a variation on those two ideas.

Route 1: Sell the home

Selling converts all of your equity to cash at once, minus selling costs (commonly in the range of 6–10% of the price) and any remaining loan payoff. It is the only route that ends your exposure to the property entirely — no more mortgage, taxes, insurance, or maintenance.

Variations include selling on the open market with an agent, selling to a cash buyer or investor (typically faster but at a discounted price), and selling as-is without repairs. Downsizing — selling and buying something cheaper — lets you keep housing while freeing part of the equity.

Route 2: Cash-out refinance

A cash-out refinance replaces your existing mortgage with a larger one and hands you the difference in cash. Lenders typically cap the new loan around 80% of the home’s value.

Works well when: the new interest rate is at or below your current rate, and you want one payment.
Watch out for: resetting the clock on a long loan term, closing costs (often 2–5% of the loan), and the fact that your entire balance now carries the new rate — painful if rates have risen since you got the original loan.

Route 3: Home equity loan (second mortgage)

A home equity loan leaves your first mortgage untouched and adds a second, fixed-amount loan on top. You receive a lump sum and repay it in fixed installments over a set term.

Works well when: you have a low rate on your first mortgage that you want to keep, and you need a known amount for a defined purpose.
Watch out for: a second monthly payment, and rates that typically run somewhat higher than first-mortgage rates.

Route 4: HELOC (home equity line of credit)

A HELOC is a revolving credit line secured by your home. You draw what you need, when you need it, during a draw period (often around 10 years), then repay during a repayment period. Rates are usually variable.

Works well when: costs arrive in stages (a phased renovation, tuition), or you want a standby reserve.
Watch out for: variable-rate payment jumps, and the temptation of an open line. Our HELOC vs. home equity loan guide compares these two in depth.

Route 5: Reverse mortgage (for older homeowners)

A reverse mortgage — most commonly the federally insured HECM, generally available to homeowners age 62 and older — pays you from your equity while you keep living in the home. No monthly repayment is required; the loan comes due when you sell, move out, or pass away.

Works well when: an older owner is equity-rich but income-constrained and intends to stay put.
Watch out for: substantial fees, compounding interest that erodes the estate, and strict obligations to keep up taxes, insurance, and maintenance. Counseling from an approved agency is required for HECMs — use it.

Route 6: Newer alternatives

Home equity investments / shared appreciation agreements give you cash today in exchange for a share of your home’s future value. There is no monthly payment, but the eventual cost can be large if your home appreciates strongly, and these contracts vary widely. Sale-leaseback arrangements — selling your home to a company and renting it back — provide full liquidity but end your ownership. Both categories deserve careful, independent review before signing.

Choosing among them

Three questions narrow the field quickly:

Do you want to keep living in the home? If not, selling dominates.
Do you need a lump sum or ongoing access? Lump sum favors a loan or refinance; staged needs favor a HELOC.
What is your current mortgage rate? A below-market first mortgage is worth protecting — that argues against a cash-out refinance.

Remember that every borrowing route puts your home on the line: miss enough payments and foreclosure is possible. That risk is the common thread of our guide on equity, leverage, and risk.

This guide is educational only and is not financial, legal, or tax advice.