Your home is one of your biggest investments, and over time, you’ve probably thought about making some updates — maybe a kitchen remodel, a new roof, or adding a cozy outdoor space. But home improvements can be expensive, and not everyone has the extra cash lying around. That’s where home equity loans and HELOCs (home equity lines of credit) come in.

If you’ve built up equity in your home, you might be able to use it to fund renovations and increase your home’s value. Let’s break down how it works, the best projects to invest in, and whether tapping into your home equity is the right move for you.

What Is Home Equity and How Can You Use It?

Home equity is the difference between what your home is worth and what you still owe on your mortgage. As you pay down your loan and property values rise, your equity grows, giving you a valuable financial resource.

There are two popular ways homeowners use equity to finance home improvements:

1. Home Equity Loan – A home equity loan works like a traditional loan, giving you a lump sum upfront with predictable monthly payments. Best for one-time projects with a set cost.
2. HELOC (Home Equity Line of Credit) – A HELOC works more like a credit card, allowing you to borrow money as needed up to a certain limit. Best for ongoing or phased projects where costs might fluctuate.

Both options typically offer lower interest rates compared to personal loans or credit cards, making them a smart choice for financing renovations.

Best Home Improvement Projects to Increase Your Home’s Value

Not all home improvements are created equal. If you’re going to borrow money, it’s smart to invest in projects that boost your home’s value and make life more comfortable. Here are some of the best upgrades to consider:

• Kitchen Remodels – Even minor updates like new countertops, cabinets, and energy-efficient appliances can add value and modernize your space.
• Bathroom Upgrades – A refreshed bathroom with updated fixtures, new tile, or even an extra half-bath can be a game changer.
• Curb Appeal Enhancements – Fresh landscaping, a new front door, or even repainting the exterior can make a big difference when it comes to home value.
• Energy-Efficient Improvements – Replacing old windows, upgrading insulation, or adding solar panels can save money on utilities and attract future buyers.
• Adding Living Space – Whether it’s finishing your basement, adding a deck, or building a home office, extra space means extra value.

If you plan to sell in the near future, prioritize projects that increase resale value. If you’re staying long-term, focus on renovations that enhance your lifestyle.

Is Using Home Equity for Home Improvements a Good Idea?

While borrowing against your home’s equity can be a smart financial move, it’s important to make sure it’s the right choice for your situation. Here are some things to consider:

• Do you have enough equity? Most lenders require homeowners to have at least 15-20% equity before borrowing against it.
• Can you afford the payments? Even with lower interest rates, make sure your budget can handle the monthly repayment.
• Will the renovation add value? If the project will improve your home’s value and quality of life, it’s often worth the investment.
• Do you plan to stay in your home? If you’re selling soon, focus on improvements with a high return on investment.

How to Get Started

If you’re thinking about using your home’s equity to finance renovations, here’s how to begin:

1. Determine Your Equity – Check how much equity you have in your home to see if borrowing is an option.
2. Explore Loan Options – Compare home equity loans and HELOCs to find the best fit for your needs.
3. Set a Budget – Have a clear idea of your renovation costs before applying for a loan.
4. Talk to a Lending Expert – The team at Peoples Bank & Trust can walk you through the process and help you choose the right financing option. Contact us today for any questions you may have.

Turn Your House into Your Dream Home

Your home is more than just a place to live — it’s an investment in your future. If you’re ready to tackle those long-awaited upgrades, a home equity loan or HELOC could be the key to making it happen.

At Peoples Bank & Trust, we’re here to help you make the most of your home’s value with financing options that fit your needs. Visit us today or give us a call to learn more about how you can turn your home equity into home improvements!

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