If you are looking for a cost-effective way to improve your home and increase its value, using your home equity as a financing option could be your best choice. Home equity refers to the difference between your current home worth and the amount you still owe on your mortgage. Let us say that your home value right now is at $200,000, but you still need to pay off $150,000 on your mortgage. Therefore, you have a $50,000 home equity.

The good news is that you can access your home equity through a home equity loan and use it however you want. In this article, we will focus on home renovation and how you can use your home equity to build a better and more valuable home. 

How to Get Your Home Equity

You can acquire your home equity in three different ways. 

  1. Cash-Out Refinance: This method is the process of replacing your current mortgage with a new one worth more than your pending mortgage fees. The difference between the two would be paid out to you by cash.
  2. Home Equity Loan: This method is like applying for a traditional loan. It is a great option if you find a low interest rate. The lender would pay you a lump sum at the beginning of the term, and then you would pay it back depending on the terms.
  3. Home Equity Line of Credit (HELOC): This works like a credit card where you can spend any amount until you reach your limit and repay it and its interest over time. 

Why Use It for Home Renovation?

As mentioned above, any homeowner can use their home equity for different purposes, but if you use it for home renovation, here are the things you might benefit from: 

  1. Higher Chances of a Low-Interest Loan Rate: If you chose home equity or the HELOC method, expect a lower interest loan rate. The two options are specially designed so that homeowners can conduct home improvements.  
  2. You Can Get Tax Deductions: If the money is used to improve the value of the home, you get a tax-deductible loan interest rate. 
  3. You Get the ROI Later: Upgrading a home is always rewarding if you plan to sell your property later. The more changes you apply to your home, the higher your property value becomes. 

How to Improve Your Home Using Your Home Equity

If you are not sure where to begin, here are some of the options you can consider:

  1. Remodel Your Kitchen: The kitchen is one of the most used rooms in a house, and buyers love nice kitchens. Even a minor kitchen renovation could increase your home value. As per Remodeling’s Cost VS Value Report, you could recover your cost expenses by 77.6% thanks to your house’s new resale value. 
  2. Remodel Your Bathroom: A mid-range bathroom remodel, on the other hand, could recoup 64% of your renovation expense. The bathroom is another room that homeowners usually renovate to attract homebuyers, and it is a decision you would not regret. 
  3. Replace Your Roof: Changing your roof material allows you to recoup 61.2 to 65.9% of your spendings, depending on the material you choose. 
  4. Build a Deck: Another popular renovation project for homeowners is the creation of a deck. Besides enhancing your house’s value, it also increases your living space and allows you to enjoy the outdoors comfortably.


Spending to improve one’s home is always worth it. Besides enjoying the output for yourself, you can also benefit from it later when you decide to put the house up for sale. Home improvement is meant for the homeowner’s comfort and pleasure, and if your home equity permits, why not allow yourself to make your house feel more like home?

If you are interested in acquiring a home equity loan, we can help. Performance Mortgage can provide you with the best loan program in Louisiana. Allow us to assist in achieving your dream home. Apply for a loan now or contact us to learn more about our services.