In the unusual economic atmosphere of early 2025, in which inflation is rising again and interest rate cuts are frozen, home equity borrowing has become a clear, viable alternative. With a home equity loan or home equity line of credit (HELOC), owners can access a large amount of money (the average home equity amount is around $320,000 currently) and they can do so at an interest rate significantly lower than what’s generally available with personal loans or credit cards.
To get the most money, however, homeowners will first need a substantial amount of equity to utilize. Since equity is calculated by deducting the existing mortgage balance from the home’s current value, it helps to boost the latter amount as much as possible, ideally before applying for the loan or HELOC. But how can you grow your home equity effectively, especially at the start of 2025? There are multiple ways to do so now, three of which we’ll detail below.
Start by seeing how much home equity you could borrow here now.
How to grow your home equity in 2025
The approach to growing your home equity this year isn’t much different than it would be in other years, but with February coming to an end, it makes sense to explore these options quickly if the intention is to boost your home equity for borrowing purposes later in 2025:
Complete strategic home projects
Not every home repair or renovation will necessarily improve your home’s value. A major kitchen renovation, bathroom addition or landscaping can raise your home’s value, perhaps to a significant degree. But not all home projects are created equally and they all won’t increase your equity. Some, like personalized renovations that are highly specific to your tastes and living preferences, may even decrease your home’s value. So, if the intention is to ultimately boost the equity to borrow from it later in 2025, it’s important to be strategic in your home project approach.
Learn more about your current home equity loan options here.
Explore refinancing options
While many homeowners have mortgage interest rates secured when rates hovered near record lows, there are still some owners who could benefit from refinancing now. If you took out a mortgage loan in 2023, for example, and paid a rate of around 8% then and can refinance to 7% or lower now, it may make sense to do so. If you do, you can start paying less interest to the lender and more toward your existing balance, reducing the latter and, thus, increasing your home equity levels. But it’s important to do the math here before acting, particularly considering that this scenario is only applicable to select homeowners. Mortgage refinancing closing costs will also need to be accounted for before proceeding.
Review your payment schedule
Do you pay your mortgage on time each month with relative ease? If that’s not a burden, consider upping your payment schedule slightly by moving to a bi-weekly schedule instead. Instead of making 12 full monthly payments, you’ll make 26 bi-weekly half payments instead. The extra payments will go directly toward your existing balance, saving you in interest costs and reducing your mortgage payoff time more quickly than if you had just made the monthly payments. Do this long enough and your existing home equity will rise in tandem (although it may take longer than just 2025 to see a material difference).
The bottom line
The above list is not exhaustive, as there are multiple ways to boost your home equity this year, some of which can be used in conjunction with each other to expedite the process. And expediting that process could be critical for homeowners now. With the average amount of equity high, interest rates on home equity loans and HELOCs low, and the forecast for interest rates uncertain, it could be advantageous to start the home equity borrowing process sooner rather than later.
Have more questions? Learn more about borrowing equity from your home here.
