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Homeowners are sitting on a significant amount of collective wealth right now, and for many, it’s literally built into the walls. Thanks to years of rising home values, the average U.S. homeowner now has about $300,000 in tappable home equity, according to recent estimates. That’s a big jump from just a few years ago, and it’s creating new financial opportunities, especially for those looking to borrow at relatively low rates compared to other credit options.
While credit card APRs are above 21% currently, the rates on home equity loans and home equity lines of credit (HELOCs) are averaging around 8% right now. That may not seem cheap compared to the rates that were available a few years ago, but in today’s borrowing environment, it’s a bargain. So, for homeowners who need or want to borrow money, choosing to use their equity can be a very affordable alternative.
Of course, tapping your home equity isn’t something to do lightly. You’re essentially turning part of your home’s value into a loan backed by your property, so if you’re going to do it, make it count. Below, we’ll detail a few good ways to put $100,000 worth of your home’s equity to work right now.
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5 smart ways to use $100,000 in home equity right now
If you’re planning to borrow $100,000 worth of your home equity soon, it could make sense to use that money for the following reasons:
To pay off high-rate debt
If you’re struggling to deal with the debt you’ve taken on, one of the smarter ways to use your home equity today is to get rid of that high-rate debt, especially your credit card balances. With credit card rates well into the 20% range, the math is simple: If you can convert that debt into a home equity loan or HELOC with a rate closer to 8% or 9%, you’ll save thousands of dollars in interest. Just keep in mind that this move turns unsecured debt into secured debt that’s backed by your home. So it’s best reserved for those who are confident in their ability to repay. Otherwise, your home could be at risk of foreclosure.
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To renovate strategically and boost resale value
Home improvement is one of the most common ways homeowners use equity, but not all renovations pay off equally. Right now, for example, the types of projects that improve energy efficiency or create usable outdoor living spaces tend to have some of the highest returns on investment. So, it could pay off to use those funds for projects like replacing old windows, building a deck or patio or adding an accessory dwelling unit (ADU) that can be rented out.
Be careful, though. While a smart $100,000 renovation could significantly boost your home’s resale price and your overall net worth, you should avoid overspending on trendy upgrades that won’t hold value long-term.
To invest in a diversified portfolio
If you have little or no high-rate debt and your home is in good shape, you may want to consider using a portion of your equity to invest instead. With markets gradually stabilizing and many high-yield options remaining, investing in a diversified mix of stocks, bonds, and exchange-traded funds could potentially yield higher returns than the cost of your loan.
This strategy isn’t for the risk-averse, however. The market fluctuates, as does the rate environment, and you’ll need to be comfortable with volatility. That said, if you’ve maxed out tax-advantaged accounts and still want to grow long-term wealth, leveraging low-interest equity to invest can make sense, as long as you do it carefully.
To start or expand a small business
Your home equity can also be a low-cost way to fund your own venture, especially when other financing options are limited or expensive. Whether you’re planning to launch a consulting business, expand a successful side hustle or invest in tools and equipment to grow your income, that $100,000 in equity available to you could provide the financial runway you’re looking for.
But if you take this route, it’s important to be realistic about the risks that come with it. Most businesses take time to turn a profit, and tying your house to a venture that hasn’t been proven yet can be dangerous. So, before you embark on this plan, create a conservative business plan, build in a cash cushion and avoid putting the entire $100,000 toward startup costs if possible.
To fund education or professional development
The fall 2025 college semester is just around the corner, and investing in education can provide returns that last a lifetime. This could mean funding a graduate degree, professional certification or career change that significantly increases earning potential. The return on investment for education often exceeds what you’d get from traditional investments, after all.
And, using a lower-rate home equity loan or HELOC to fund that education can be a savvy strategy, especially if you don’t qualify for low-cost federal loans. However, it’s important to be realistic about the earning potential of the degree or certification you’re pursuing and have a clear plan for how the education will boost your income.
The bottom line
When used wisely, home equity can help you take advantage of opportunities that might otherwise be out of reach, and for homeowners with strong financial foundations, it can be a powerful tool for building wealth and improving quality of life. The key is to use it for purposes that either generate returns, reduce long-term costs or provide significant value that justifies the risk. You’re putting your home on the line, after all, so every dollar needs to serve a clear purpose in your overall financial plan.
