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Okay, so here’s what’s happening right now in the housing market. Homeowners across the country are sitting on record amounts of equity, and a lot of them are starting to wonder whether it makes sense to put some of that wealth back into the property. I get it. Between the kitchen that hasn’t been updated since the early aughts and the bathroom tile that’s seen better days, the temptation is real. The question is not whether your home needs the work. The question is how you pay for it without putting yourself in a financial bind.
ICE Mortgage Technology’s data shows that mortgage holders entered the fourth quarter with $17.3 trillion in total home equity, and about $11.2 trillion of that is considered tappable, meaning you can borrow against it while still keeping a 20% equity cushion. The average homeowner with a mortgage has roughly $204,000 available. That’s not a small number, and it represents a genuine opportunity for renovations that add value, comfort, and long-term energy savings.
But let me be real with you. Tapping equity is not free money. It’s a financial decision that affects your monthly payment, your tax situation, and your long-term wealth. In my Master’s of Social Work (MSW) program, one of the things we study is how financial stress cascades into every corner of a family’s life. So before you start picking out countertops, let’s walk through nine strategies that help you make the smartest possible decision about funding home improvements through refinancing.
And honestly, the conversation about renovation financing has gotten more nuanced than it used to be. A few years ago, rates were low enough that a cash-out refinance was almost always the obvious answer. Now, with rates sitting higher, homeowners need to compare multiple options more carefully than ever before. The good news is that you have choices, and those choices are supported by historically strong equity positions. The bad news is that making the wrong choice can cost you tens of thousands of dollars over the life of your loan. Let’s make sure that does not happen.
Before you even think about calling a contractor, you need to understand what you’re working with. Your equity is the difference between your home’s current market value and what you still owe on the mortgage. If your home appraises at $400,000 and your remaining balance is $250,000, you’ve got $150,000 in equity.
Now, lenders typically won’t let you borrow all of it. That’s because the lender wants a safety buffer in case property values dip. According to ICE’s research, the average mortgage holder is only about 44% leveraged right now, which is one of the lowest debt-to-value ratios in the past two decades. So most people have meaningful room to work with.
The National Association of REALTORS® reported that the median existing-home price reached $396,800 in January, marking the 31st consecutive month of year-over-year price increases. That’s good news for your equity position, but it also means that affordability is still stretched for buyers, which keeps supply tight and supports your property value. Understanding these numbers is the first step toward making a confident borrowing decision.
It is also worth looking at where equity growth has been strongest and where it has plateaued. Markets in the Northeast and Midwest have shown the most resilient price appreciation recently, while several Sun Belt metros have seen values flatten or decline modestly. If your property is in a market where prices have softened, you may have less tappable equity than you expected, which could change your renovation financing approach. On the other hand, if your local market is holding strong, you likely have more leverage than you realize. Checking recent comparable sales in your neighborhood gives you a grounded starting point before you even talk to a lender.
Here’s a quick way to estimate. Take your home’s current value, subtract what you owe, and then subtract another 20% of the home’s value as the lender’s required cushion. Using our earlier example, that’s $400,000 minus $250,000 minus $80,000, leaving you with $70,000 of accessible equity. Your actual number will depend on your lender’s specific loan-to-value requirements, your credit score, and your debt-to-income ratio. AmeriSave’s team can walk you through the math for your specific situation, and the process starts with a property valuation so everyone is working from the same set of numbers.
One thing worth noting is that equity calculations can shift depending on how your home’s value is determined. An appraisal conducted by a licensed professional can come in higher or lower than what online valuation tools suggest, and lenders rely on the appraised value rather than Zillow or Redfin estimates. If you recently completed any improvements or if comparable sales in your neighborhood have been strong, you may have more equity than you think. Conversely, if your area has seen price softening, the appraisal might come in below expectations. Getting a clear-eyed picture of your home’s value before you commit to a renovation financing plan saves you from building your budget on shaky assumptions.
Think of it like this. You’ve got three main doors to access your equity for home improvements, and each one opens differently. A cash-out refinance replaces your entire existing mortgage with a new, larger loan, and you pocket the difference in cash. A home equity line of credit, or HELOC, sits on top of your existing mortgage as a separate revolving credit line. A home equity loan is also a second lien, but it gives you a lump sum at a fixed rate rather than a revolving balance.
When you do a cash-out refinance, you’re essentially starting over with a brand-new mortgage. The upside is that you can potentially lock in a lower rate if current rates are favorable compared to your existing loan, and you end up with just one monthly payment. The downside is that you’re spreading the repayment over a new 30-year term, which means you might pay more interest over the life of the loan even if the rate looks lower. Also, closing costs on a full refinance typically run 2 to 5% of the new loan amount.
ICE’s February report found that when rates briefly dipped to 6.04% in early January, the number of homeowners who could benefit from refinancing jumped by 20% overnight, reaching about 4.8 million borrowers. That sensitivity tells you something important: even small rate movements create real opportunities. AmeriSave offers competitive cash-out refinance rates and can help you evaluate whether replacing your current mortgage makes financial sense given the rate environment.
Something else to factor into the cash-out decision is that lenders typically charge a slightly higher rate on cash-out refinances compared to rate-and-term refinances, usually an additional quarter to half a percentage point. That’s because the lender views a larger loan balance as carrying incrementally more risk. When you model the numbers, make sure you are using the actual cash-out rate rather than the headline rate you see in mortgage advertisements, which usually reflects a rate-and-term transaction.
A HELOC works more like a credit card secured by your home. You get approved for a maximum credit limit, and then you draw against it as needed during the draw period, which usually runs five to ten years. You only pay interest on what you’ve actually borrowed, not the full available amount. This can be a terrific fit for renovation projects that unfold in stages because you are not borrowing everything upfront and paying interest on money that’s just sitting in your checking account waiting to be spent.
The cost picture has improved meaningfully. According to ICE, the monthly payment needed to borrow $50,000 through a HELOC dropped from $412 in early last year to about $311 by the end of the first quarter, a decline of more than $100 per month. HELOC withdrawals rose 22% year-over-year during that period, the largest first-quarter volume in 17 years. One in four homeowners surveyed by ICE said they were considering a HELOC or home equity loan within the next year. AmeriSave’s HELOC product lets you tap into your equity with a flexible draw period and competitive variable rates.
If you know exactly how much your project will cost and you want the certainty of a fixed monthly payment, a home equity loan might be the cleanest option. You borrow a set amount, receive it as a lump sum, and repay it over a defined term at a locked rate. There is no guessing about what your payment will be next month. The trade-off is that you lose the flexibility of a HELOC. If your contractor finds unexpected plumbing issues behind the wall and costs jump, you cannot just draw more from the line. AmeriSave’s home equity loan options provide fixed-rate stability for projects with well-defined budgets.
Not all renovations are created equal when it comes to recouping your investment at resale. The National Association of REALTORS® and the National Association of Home Builders have tracked remodeling impact data for years, and the patterns are remarkably consistent. Certain projects reliably return a high percentage of their cost, while others barely move the needle on your home’s appraised value.
Kitchen remodels remain the gold standard. A mid-range kitchen renovation, think new countertops, updated cabinetry, modern appliances, and improved lighting, typically recovers 75 to 80% of its cost when the home is sold. A minor kitchen remodel that focuses on cosmetic updates rather than a full gut job often recovers even more because the cost basis is lower. Bathroom updates follow close behind, with mid-range bath remodels returning roughly 70 to 75% of their cost.
Energy-efficiency upgrades deserve special attention. Replacing old windows, adding insulation, upgrading to a high-efficiency HVAC system, or installing a heat pump can reduce monthly utility costs while also boosting the home’s value. These improvements are especially attractive to buyers in a market where carrying costs, including insurance and utilities, are under growing scrutiny. ICE’s September report highlighted that property insurance has become the fastest-growing component of mortgage-related expenses, now accounting for 9.6% of the average homeowner’s total monthly payment. Anything you can do to offset rising carrying costs adds value.
Curb appeal projects like new siding, a front door replacement, or a manufactured stone veneer consistently rank among the highest-return investments. These are relatively affordable improvements that make a dramatic visual impact and often recover 80% or more of their cost.
What sometimes gets overlooked is the difference between renovations that add marketable value and those that simply make your home more enjoyable to live in. A swimming pool, for example, might bring your family years of happiness, but it rarely recoups its installation cost at resale and can actually narrow your buyer pool. Similarly, highly personalized design choices like bold paint colors, unconventional layouts, or niche amenities can appeal to you without adding broad market value. If your primary goal is financial return, stick with projects that have wide appeal. If your primary goal is quality of life and you plan to stay long-term, then factor that personal value into your decision even if the resale numbers are lower.
The National Association of Home Builders reports that remodeling activity tends to track closely with existing home sales. As more homes change hands, more buyers invest in updates to make their new purchase feel like their own. With the NAR’s Housing Affordability Index reaching its most favorable level since March of the prior year, the remodeling market could see a boost if transaction volume picks up through the spring and summer selling season.
Let’s get specific so you can see how the math actually works. Suppose you own a home valued at $400,000 with a remaining mortgage balance of $250,000 at a 7.25% rate. Your current monthly principal and interest payment is approximately $1,706.
You want to fund a $60,000 kitchen and bathroom renovation. With a cash-out refinance at 6.75% on a new $310,000 loan, your new monthly payment would be about $2,011. That’s an increase of roughly $305 per month, or $3,660 per year. Over the 30-year life of the new loan, you would pay a total of about $723,960, compared to the roughly $614,160 remaining on your old loan. The net cost of borrowing that $60,000 is embedded in the overall interest picture, which is why it’s critical to compare the all-in cost rather than just the monthly payment.
Now compare that with a HELOC. If you kept your existing mortgage in place and took a $60,000 HELOC at 7.5% with a 10-year draw period and 20-year repayment term, your HELOC payment during the draw period might be around $375 per month in interest only, with your total monthly housing payment rising to about $2,081. The key difference is that your low-rate first mortgage stays untouched, and you are only paying interest on the improvement funds. AmeriSave can run a side-by-side comparison like this for your specific numbers so you can see which path costs less over your expected time in the home.
One number that matters enormously is how long you plan to stay in the home. A cash-out refinance carries higher upfront closing costs, typically 2 to 5% of the new loan amount, which means you need several years of lower monthly payments or added home value to recoup those costs. If you plan to sell within three to four years, a HELOC or home equity loan often makes more financial sense because the upfront costs are lower. If you are staying for seven years or more, a cash-out refi at a lower rate can deliver meaningful savings over the long run.
There’s also the opportunity cost to consider. If you refinance at a higher rate than your current mortgage just to access renovation funds, you are paying a premium for that cash on every dollar of your original balance, not just on the improvement money. For example, refinancing a $250,000 balance from 4.5% to 6.75% adds about $375 per month to your base payment before you even account for the additional $60,000 in borrowing. Over ten years, that rate increase on the original balance alone costs you about $45,000 in extra interest. This is why financial planners often recommend keeping your first mortgage intact and using a second lien product for renovations unless the rate math clearly favors a full refinance.
Here’s what this means for you on the tax side. The Tax Cuts and Jobs Act, now made permanent through the One Big Beautiful Bill, allows you to deduct mortgage interest on loans used to buy, build, or substantially improve your primary residence or a second home, subject to certain limits. The operative phrase is “substantially improve,” which the IRS generally interprets as work that adds value to the home, prolongs its useful life, or adapts it to a new use. A kitchen remodel qualifies. Routine maintenance and repairs typically do not.
For the current tax year, the standard deduction is $32,200 for married couples filing jointly, $16,100 for single filers, and $24,150 for heads of household. That higher standard deduction means fewer homeowners itemize than in the past, but if your mortgage interest plus state and local taxes plus other deductions exceed those thresholds, itemizing could save you money. The SALT deduction cap increased significantly this year to $40,400 for most taxpayers under the One Big Beautiful Bill, up from the previous $10,000 limit that had been in place since the original TCJA took effect.
If you are using a HELOC or home equity loan specifically for home improvements, the interest on that loan may also be deductible under the same rules. The key is that the funds must actually be used for qualifying improvements to the property that secures the loan. Using a HELOC to consolidate credit card debt or pay for a vacation does not qualify for the deduction, even though the loan is secured by your home. Keep detailed records of how improvement funds are spent, because the burden of proof falls on you if the IRS asks questions.
I’m not a tax professional, and you should absolutely talk with a qualified CPA or tax advisor about your specific situation. But understanding the general framework helps you model the true after-tax cost of financing your renovation.
One additional wrinkle worth knowing about: the One Big Beautiful Bill also introduced new above-the-line deductions for auto loan interest, tips, and overtime that may affect your overall tax picture even if they are not directly related to home improvement. The broader point is that the tax landscape has shifted meaningfully, and what made sense two or three years ago may not be optimal now. If you are considering a large renovation and expect to itemize, running a projection with your tax advisor before you finalize the financing structure is time well spent. The interest deductibility of your renovation loan can effectively reduce the cost of borrowing by your marginal tax rate, which for many homeowners in the 22 to 24% bracket translates to real savings.
Timing matters more than most homeowners realize. The interest rate environment over the past year has been a rollercoaster, and the data shows just how sensitive the market is to small rate movements. When 30-year conforming rates touched 6.04% in early January, ICE’s research found that the pool of borrowers who could meaningfully benefit from refinancing expanded by 20% practically overnight. Nearly 1.3 million recently originated mortgages carry rates between 6.875 and 6.99%, including more than half a million funded last year. That’s the most common rate band from recent originations and the group most sensitive to any further rate declines.
At the same time, the lock-in effect remains powerful. About 37.2 million homeowners still carry rates below 5%, and roughly 12.1 million have rates below 3%. Those borrowers are overwhelmingly choosing to stay put rather than replace cheap debt with more expensive financing, and for good reason. If you’re in that group and want to fund improvements, a HELOC or home equity loan typically makes far more sense than a cash-out refinance that would sacrifice your low-rate first mortgage.
For homeowners with rates in the upper 6s or 7s, the calculus shifts. If you can refinance into a rate that is meaningfully lower, the cash-out refinance can effectively fund your renovation while simultaneously reducing your overall borrowing cost. AmeriSave monitors rate movements daily and can help you identify the right moment to lock in a refinance rate that works for your project timeline. The monthly principal and interest payment needed to purchase the average-priced home dropped by $164 year-over-year in early January, to about $2,091. That same affordability math applies when you’re refinancing.
Here’s a practical way to think about timing. If you are planning a renovation that will take several months to complete, consider getting your financing lined up before the project starts, even if you don’t need the funds immediately. Rate locks on cash-out refinances typically last 30 to 60 days, so you want to coordinate your closing date with your project start date. With a HELOC, you have more flexibility because you can close the line of credit and then draw against it when you are ready. This staging approach means you are not paying interest on borrowed money while you are still getting bids from contractors or waiting for permits.
Keep in mind that rates are not the only variable affecting your refinance timing. The appraisal process, title search, and underwriting review all take time, and seasonal demand can slow turnaround during busy spring and summer months. If you know you want to tackle a major renovation this year, starting the financing conversation sooner rather than later gives you more flexibility to lock a favorable rate and avoid feeling rushed when the contractor is ready to break ground.
Okay, I need to get a little personal here. My husband and I gutted our kitchen a few years ago, and it was one of the most rewarding and simultaneously stressful experiences of my life. The project went over budget (they always do), it took longer than planned (they always do), and there were at least three moments where I seriously considered whether we should have just moved instead. But the result was worth it, and the equity we built through that project has been a meaningful part of our family’s financial picture.
The biggest lesson I learned is that you need a financial buffer beyond your renovation estimate. Industry data consistently shows that most projects exceed their initial budgets by 10 to 20%, and sometimes more when contractors encounter surprises behind walls or under floors. If your contractor quotes $50,000, you should have access to at least $55,000 to $60,000, which is another reason a HELOC can be preferable to a fixed-amount home equity loan. You only draw what you need, but you have the headroom if costs creep up.
Also, stage your draws strategically. If you’re using a HELOC, don’t pull the entire approved amount on day one. Draw funds as milestones are reached and contractor payments come due. This minimizes the interest you’re paying on idle cash. And make sure your contractor agreement includes a payment schedule tied to completion milestones, not just calendar dates. This protects you financially and keeps the project on track.
From a project management perspective, and this is something I deal with professionally every day, the homeowners who have the smoothest renovation experiences are the ones who get multiple bids, check references, verify licensing and insurance, and put everything in a written contract before any work begins. I know that sounds obvious, but you would be amazed how many people skip those steps because they are excited to get started. The contract should spell out the scope of work, materials to be used, payment schedule, timeline with milestones, warranty terms, and what happens if either party wants to make changes. A well-structured contract protects your renovation budget just as much as the financing structure does.
One more thing about managing the renovation process. If you are living in the home during construction, factor in the cost and inconvenience of temporary disruptions. A kitchen gut job means weeks without a functioning kitchen, which usually means eating out more than normal or setting up a temporary cooking space. These hidden costs add up and should be part of your overall budget. Some homeowners find it worthwhile to include a modest relocation budget in their financing plan, especially for projects that affect core living spaces like kitchens and bathrooms.
The Harvard Joint Center for Housing Studies tracks remodeling spending through its Leading Indicator of Remodeling Activity, and the latest projections paint an interesting picture. Current year-over-year growth in home improvement spending is running at about 2.9%, and the Center expects that pace to moderate to roughly 1.6% by the end of this year. Even with that slowdown, total annual homeowner spending on remodeling and repairs is projected to reach approximately $522 billion. That is a significant number, and it reflects the fact that millions of homeowners are choosing to invest in their current properties rather than trade up in a market where affordability remains stretched.
Home prices grew just 0.6% nationally last year, the softest annual gain in more than a decade according to ICE’s Home Price Index. Several Sun Belt and Western markets have seen outright price declines, while the Northeast and Midwest have shown relative stability. That regional divergence matters for renovation financing because your local market conditions affect both your available equity and the likely return on your improvement investment. In markets where values are softening, it may be smarter to focus on maintenance and deferred repairs rather than high-end renovations that assume continued price appreciation.
The broader economic picture includes rising property insurance costs, which ICE flagged as the fastest-growing slice of homeownership expenses. The average annual insurance payment for single-family mortgage holders has climbed to nearly $2,370 per year. When you factor insurance, taxes, and maintenance into your renovation planning, you get a more realistic picture of total carrying costs. AmeriSave’s approach to home equity lending considers this full picture, not just the loan-to-value ratio.
For homeowners weighing whether to renovate or relocate, the numbers increasingly favor staying put and improving. Moving costs, real estate commissions, and the rate differential between your current mortgage and a new purchase loan can add tens of thousands of dollars to the cost of trading up. The lock-in effect that keeps 37 million homeowners in low-rate mortgages also creates an incentive to invest in the home you already own. Spending $60,000 on a kitchen remodel is a lot less expensive than selling, buying, and financing a different property at current market rates. That calculation is not lost on homeowners, and it’s a significant driver of why remodeling spending remains robust even as transaction volumes stay below pre-pandemic levels.
Finishing the renovation is not the end of the financial story. What you do in the months and years after the work is completed determines whether that investment truly pays off. Start by getting a post-renovation appraisal or at least a comparative market analysis from a real estate professional. This establishes your new home value on paper, which can be important for insurance coverage, property tax assessments, and future borrowing decisions.
Update your homeowner’s insurance policy to reflect the improvements. If you added square footage, upgraded systems, or installed high-end finishes, your replacement cost has increased. Many homeowners skip this step and discover the gap only when they file a claim. Given that insurance costs are already climbing, you want to make sure you’re paying for appropriate coverage rather than being underinsured on a more valuable property.
Keep every receipt, permit, and contractor invoice in an organized file. These documents serve multiple purposes: they support your cost basis for tax purposes if you sell the home, they provide evidence of improvements for future appraisals, and they can help resolve any warranty disputes with contractors. Digital copies stored in the cloud are ideal because paper gets lost.
Finally, consider how the renovation affects your overall debt picture. If you took a cash-out refinance or HELOC to fund the work, your total debt has increased even though your home value has also risen. Run the numbers periodically to make sure your debt-to-equity ratio stays comfortable. The National Association of REALTORS® noted that the typical homeowner has accumulated about $130,500 in housing wealth since early last decade, but that wealth only remains real if you manage your borrowing conservatively. AmeriSave provides ongoing support for homeowners who want to periodically reassess their equity position and explore refinancing opportunities as rates continue to evolve.
If you financed your renovation with a HELOC, pay attention to the transition from the draw period to the repayment period. During the draw phase, you may have been making interest-only payments, which means your monthly obligation will increase, sometimes substantially, when the repayment period begins and you start paying down principal. Planning for that payment increase now, rather than being surprised by it later, is essential. Some homeowners choose to make principal payments even during the draw period to soften the transition, and that’s a strategy worth discussing with your lender.
At the end of the day, refinancing for home improvements is not a one-size-fits-all proposition. The right choice depends on your current interest rate, how much equity you have, how long you plan to stay in the home, the scope of the project, and your comfort level with adding to your debt load. For homeowners with higher-rate mortgages, a cash-out refinance can be a powerful tool that simultaneously lowers your rate and funds renovations. For those locked into low rates from a few years ago, a HELOC or home equity loan preserves that cheap first-lien debt while still giving you access to improvement capital.
What I hope you take away from this is that the data supports taking a measured, well-planned approach. Home improvement spending remains strong because homeowners understand that their property is both a place to live and a long-term financial asset. With record levels of tappable equity available and borrowing costs moderating from recent highs, the conditions for smart renovation financing are genuinely favorable. Just make sure you run the numbers, plan for cost overruns, understand the tax implications, and choose the financing structure that aligns with your family’s goals. AmeriSave is here to help you evaluate your options, compare loan structures, and find the path that turns your renovation plans into reality. Visit amerisave.com to explore cash-out refinance, HELOC, and home equity loan products tailored to your needs.
Most lenders want you to keep at least 20% equity in your home after the cash-out transaction, which means you usually need more than 20% equity before you apply. If you have a $400,000 home with a $280,000 mortgage balance, you have 30% equity. You could get up to $40,000 through a cash-out refinance while still staying below the 80% loan-to-value limit. Most of the time, you need a credit score of at least 620 to get a conventional cash-out refinance. However, borrowers with scores above 700 can get better rates. AmeriSave's cash-out refinance options can help you figure out how much you can borrow based on your current equity and credit score.
The answer mostly depends on the interest rate on your current mortgage. If you are paying 7% or more on your current mortgage, a cash-out refinance at a lower rate can help you pay for the remodel and lower the total cost of borrowing. If you locked in a rate below 5% during the pandemic, a HELOC is almost certainly the better choice because it keeps your first mortgage at a low rate. ICE Mortgage Technology says that the monthly payment needed to borrow $50,000 through a HELOC has gone down by more than $100 since early last year. This makes this option more appealing. Look at AmeriSave's HELOC products to see how they stack up against each other.
If you itemize, you can usually deduct the interest on a mortgage used to buy, build, or make major improvements to a qualified residence, as long as the loan amount is within IRS limits. The standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers. To get a benefit, you would need to have more itemizable deductions than those amounts. This year, the SALT deduction cap went up to $40,400, which could mean that more homeowners will have to itemize their deductions. Keep receipts that show the loan money was used for improvements that met the requirements. A qualified tax professional can tell you if your specific renovation project meets the IRS's definition of a "substantial improvement." Visit AmeriSave's learning center to find out more about ways to refinance.
A cash-out refinance usually takes 30 to 45 days from the time you apply until the time you close. However, the time it takes can change based on how complicated the title search is, when the appraisal is scheduled, and how quickly you send in the necessary paperwork. The appraisal is often the longest step because the appraiser has to figure out how much the property is worth right now before the lender can figure out how much equity is available. Getting your pay stubs, tax returns, and bank statements in order before you apply can cut the time it takes to get approved by days. You can get started by checking the current rates on the mortgage rates page. AmeriSave's digital platform makes the paperwork process easier.
When you sell your home, kitchen remodels usually pay back 75% to 80% of their costs. Minor cosmetic changes often pay back even more. Most of the time, bathroom renovations pay back 70 to 75%, and projects that improve the look of the outside of the house, like new siding and a new front door, can pay back more than 80%. Buyers are more likely to consider utility costs when deciding how much they can afford, so energy-efficient upgrades like new windows and better HVAC systems are becoming more valuable. If you want to sell your home soon, focus on improvements that buyers can see right away, like painting or landscaping, instead of work that is hidden behind walls. AmeriSave's home equity loan gives you a fixed rate of money for specific home improvement projects.
Opportunity cost and liquidity are the two main factors that determine whether to borrow or pay cash. If you have a good emergency fund and the cost of the renovation isn't too high, paying cash means you won't have to pay any interest. But if you use up all your savings to pay for a big renovation, you could be in trouble if something unexpected comes up. Even after paying for renovations, many financial advisors say you should keep at least three to six months' worth of living expenses in savings. You can spread the cost over time and keep your money available by refinancing or taking out a HELOC. ICE says that there is about $11.2 trillion in tappable equity available across the country. This means that most homeowners can borrow a lot of money without running out of savings. Go to amerisave.com/prequalify to find out how much money you can borrow based on the equity in your home.
A cash-out refinance gives you a new loan at the current market rate that completely replaces your current mortgage. If you are currently paying 4% and the market rate is around 6.75%, your new rate will be higher, and your monthly payment will go up because the rate is higher and the loan balance is larger. That is why homeowners with low existing rates usually find that HELOCs or home equity loans are a better way to pay for renovations. ICE's data shows that about 37.2 million homeowners still have rates below 5%. About 95% of those borrowers chose to keep their existing mortgages through last year. If you're not sure which option is best for you, AmeriSave's refinance options include tools that let you compare your current loan to a new cash-out structure so you can see how much more it will cost.
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