Refinance or Renovate? How to Make the Most of Your Home Equity

Your home is where life happens, but it’s also a powerful financial asset. Over time, as your mortgage balance decreases and your property value rises, you build equity. That equity opens the door to new opportunities, whether it’s saving money through refinancing or investing in home upgrades. But what’s the best move for you—refinancing your mortgage or using your equity to fund a renovation?

At First Union Home Finance, we help homeowners weigh their options and make confident, informed decisions. Here’s what to consider when deciding how to put your home equity to work.

What Is Home Equity?

Home equity is the portion of your home that you truly own, or the difference between what your home is worth and what you still owe on your mortgage. As your loan balance goes down and your property value goes up, your equity grows. That equity can be leveraged through a refinance to either adjust your loan terms or access cash for improvements.

Think of it as a financial tool: when used wisely, your equity can help you reach your goals—whether that’s saving money or transforming your living space.

Refinance: Restructure Your Loan, Reduce Your Rate

Ideal for: Lowering monthly payments, shortening your loan term, or gaining more stability with a fixed-rate mortgage.

If interest rates are lower now than when you purchased your home, refinancing could save you significantly over time. By locking in a lower rate, you can reduce your monthly payments and overall interest. Or, if you’re ready to pay off your loan sooner, refinancing to a shorter term may help you build equity faster and reduce total interest costs.

Many homeowners also use refinancing as a way to convert from an adjustable-rate mortgage (ARM) to a fixed-rate loan, providing more predictability in their monthly payments.

Renovate: Use a Cash-Out Refinance to Upgrade Your Home

Ideal for: Funding home improvements, increasing resale value, or creating a more comfortable living environment.

A cash-out refinance lets you borrow more than your current mortgage balance and take the difference in cash. That money can be used for remodeling projects, repairs, or upgrades—anything from finishing a basement to modernizing your kitchen or adding a home office.

Renovations can improve your quality of life and may increase the value of your home. However, it’s important to budget carefully, since your new mortgage balance will be higher, potentially increasing your monthly payment.

Which Option Is Right for You?

Here are a few questions to help guide your decision:

• Are you primarily looking to save money or invest in your property?

• How do current mortgage rates compare to the rate on your existing loan?

• Do you plan to stay in your home for the next several years?

• Will the renovation project add lasting value or improve daily life?

• Can your monthly budget comfortably absorb any increase in payments?

There’s no one-size-fits-all answer—but there is a solution that fits your situation.

Work with a Team That Puts You First

At First Union Home Finance, we take the time to get to know you and your financial goals. Whether you’re considering a traditional refinance or thinking about tapping into your equity for a renovation, we’re here to help you find the smartest path forward.

Ready to explore your refinancing or renovation options? Reach out to the team at First Union Home Finance. We’ll help you understand what’s possible and walk with you every step of the way.