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How to Leverage Home Equity to Help Build Your Future

Home equity loans serve as a powerful tool in providing homeowners with extra funds to make home improvements and other investments that they might not otherwise be able to afford. But remember that a home equity loan is not free money and these loans work best for specific situations. In this article, we will discuss how these loans work and the right time to tap into your home’s equity.

What is a home equity loan?

A home’s equity is defined as the difference between the home’s value and the amount that is paid off. For example, if your home is worth $400,000 and you have $100,000 left to pay off the mortgage, then you have $300,000 in built-up equity.

Home equity loans allow you to tap into this built-up value through two types of loans. The first type is called a term, or closed-end loan. In this scenario, a homeowner receives a lump sum, then pays it off over a set amount of time with a fixed interest rate.

The second and most common type is called a Home Equity Line of Credit (HELOC) loan. HELOC works like a credit card, as you are able to borrow up to a certain amount for the life of the loan. Rather than a lump sum, you withdraw money as needed. HELOC loans also involve a flexible interest rate that fluctuates over the course of a loan.

How should you use home equity loans?

Technically, you can use home equity loans for anything once you get  approved. However, you will need to pay back the loan so avoid using it as your personal piggy bank. A good rule of thumb is to use home equity loans only for investments that increase your home’s value. Avoid using the proceeds for everyday expenses like gas, groceries or vacations. Here are some common, smart ways to use home equity.

  1. Home Improvements – Remodeling or fixing up your home generally adds value to your property. However, some types of home improvements are not equal to others. For example, updating your kitchen cabinets or adding energy-efficient appliances add more value than installing a swimming pool.
  2. Emergency Expenses – We all know that unexpected emergencies are a part of life. Home equity provides a secure cushion in case of sudden medical expenses, job loss or other difficult situations. Because you are able to withdraw from a HELOC loan as needed, you can use the money as an emergency line of credit if necessary.
  3. Credit Card Debt – Since home equity loans generally carry lower interest rates than credit cards, it can make sense to use the proceeds to pay off credit card debt. But be careful not to use this as a reason to continually run up your credit card balance.

Vantage West Home Equity Loans

Vantage West offers premium HELOC loans for up to $10,000 for qualifying homeowners. Your property must be located in Arizona and be owner-occupied, along with being your primary residence.

Once approved, you can tap into your equity with a Home Equity Visa card and be able to transfer funds via Vantage West’s online banking system. You can even keep your line of credit available as an overdraft protection source.


Check out Vantage West's diverse selection of home loans, including specialty loans for veterans, doctors and more!

Check out Vantage West's diverse selection of home loans, including specialty loans for veterans, doctors and more!

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