Home equity refers to the portion of your home that you actually own. A home equity line allows you to use the equity you’ve built up in your home to meet your larger financial goals. The way to calculate your equity is by subtracting the mortgage amount you still owe from the current value of your home.

Are you curious whether a home equity line might be right for you? See if any of the following three scenarios match your situation.

A home equity line is right for you if…

1 • You have at least 20% ownership in your home.

Home Equity Loan

If you have at least 20 percent ownership in your home, then you are one of the over 40 million U.S. homeowners who have equity in their homes. By making on-time monthly payments, you might have more equity than you realize. Having an even larger amount of home equity, 30 percent or higher, gives you and your family the opportunity to tackle projects that require a larger financial commitment.

Use these funds to renovate your home, or to pay for your children’s college education. Additionally, if you are an empty nester, increase your enjoyment in your home by remodeling to suit your new-found freedom. What’s more, you might use these funds to consolidate your credit card, auto, medical, or other debt.

Please note that Figure will consider loans up to 95% loan-to-value for consumers with excellent credit. That means that even if you have as little as 10% equity in your home, a home equity line might still be an option for you.

2 • You want to sell, rent or improve your home.

Home Equity Loan for Home Improvement

As a homeowner, it’s smart to look at your home as an investment to be sold, rented or improved. Any of these tactics will further maximize your home’s return on investment (ROI). Whether you want to sell or rent, and your home needs a pick-me-up, consider a remodeling project. Done correctly, these renovations increase your home’s curb appeal and add value to your home.

The consensus amongst national realtors is that large renovation projects appeal to buyers the most. These might include kitchen remodels or creating a first-floor master suite. Smaller renovation projects also positively impact the value of your home. Smaller projects include landscaping,  garage doors, interior, and exterior painting, or a fence around the yard.

It’s always wise to get advice from a local realtor about ways to improve the value of your home. Then, consider tapping into your home’s equity if you want to sell or lease your home. Or, perhaps you simply want to improve your surroundings for you and your family to enjoy.

Renovating your home is easier with the right home equity product. A home equity loan usually has a lower interest rate than that of an unsecured loan, including a personal loan and credit cards. With lower interest rates, a home equity loan makes your renovation affordable, which increases your ROI.

3 • You want to enjoy more tax write-offs.

Home Equity Loans for Tax Savings

The new tax laws that went into effect in 2018 allow homeowners to deduct interest costs against home equity debt for renovation. However, be sure to consult your tax advisor to learn about the restrictions wof this law. Deducting interest costs against large home improvement projects, new home construction, the purchase of another home, or the purchase of an investment property can result in large savings for homeowners. A loan used to complete large home improvement projects can increase the value of your current home and also provide you with a better quality of life.

According to a recent national study by NerdWallet, within the next five years, an estimated 35 percent of homeowners plan to upgrade their home to enjoy a higher quality of life, to add value to their homes, and to receive tax benefits. By taking a loan against your home equity for the purpose of increasing your home’s value and for gaining tax benefits, you subsequently increase your equity. It is a win-win scenario for many homeowners.

So, consider these three signs to determine if the time is right for a home equity loan. Doing so might enable you to achieve larger goals, such as paying for college, home improvement projects, and consolidating debt. Go to figure.com to learn more about Figure’s quick, fully digital, no-hassle HELOC application.

This was originally published on July 19, 2019, on blog.figure.com.

All Images Courtesy of Canva.

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About the Author: Ashley Edwards