Your Equity Is Growing: Here’s Why You Should Tap It Before Home Prices Shift

Last updated: December 2025

Quick answer

As home values continue to climb, your home equity is increasing. But housing markets are cyclical. Tapping your equity now with a home equity line of credit (HELOC) can help you lock in access before prices flatten or fall, reducing your borrowing power.

Is now a good time to use a HELOC?

Many homeowners are sitting on more wealth than they realize. As real estate prices rise across the country, your home’s market value grows. If your mortgage balance remains the same, this means your home equity is increasing every month.

But this equity is not permanent. It is tied to market conditions and can shrink quickly if home values drop. That is why more homeowners are using HELOCs to convert that paper wealth into usable funds before the market shifts.

A HELOC gives you access to cash without selling your home or refinancing your mortgage. It is a flexible tool that helps you take advantage of today’s high equity levels while protecting against future volatility.

What is a HELOC?

How to calculate your current tappable equity

Tappable equity is the portion of your home value you can borrow against. Most lenders allow you to access up to 85 percent of your home’s value, minus what you still owe on your mortgage.

Formula: Tappable equity = (Home value × 85%) – Mortgage balance

Example:

• Home value: $700,000
• Mortgage balance: $400,000
• Max LTV: 85 percent
• Tappable equity = ($700,000 × 0.85) – $400,000 = $195,000

This $195,000 is available to you today, assuming lender approval. If your home value drops even five percent, your tappable equity could shrink by thousands of dollars.

Use our HELOC calculator.

How to use equity before home prices fall

Home equity is not guaranteed to keep rising. Real estate is a cyclical market influenced by supply, demand, mortgage rates, and investor confidence. If market sentiment shifts, home values can decline, and your borrowing power can decrease with it.

Consider the following risks:

• A 10 percent drop in your home’s value reduces both your net worth and available equity
• Rising unemployment or tighter credit standards could limit lender approvals
• Delaying access to equity could force you to borrow under less favorable terms later

Tapping your equity now means you secure a line of credit based on today’s high valuation, not tomorrow’s uncertainty.

How does a HELOC work?

Market correction risk: Why equity is vulnerable

In the last 12 months, many metro areas have seen property values grow by double digits. But this growth may not be sustainable. Economic pressures such as inflation, interest rate uncertainty, and slowing demand could lead to a market correction.

When housing prices adjust downward:

• Homeowners lose access to tappable equity
• Borrowers with high loan-to-value ratios may no longer qualify for a HELOC
• Lenders may lower approval thresholds or tighten terms

A homeowner with $150,000 in tappable equity today might only qualify for $90,000 next year if the home’s value falls by 10 percent and LTV standards tighten.

Check your HELOC rate in minutes.

HELOC vs cash-out refinance in shifting markets

A cash-out refinance replaces your existing mortgage with a new one that includes extra cash from your home’s equity. This method works well when rates are low, and borrowers want to consolidate their debt.

However, in a rising or volatile rate environment, most borrowers do not want to reset their mortgage terms. That is where a HELOC comes in as a more strategic option.

Comparison:

A HELOC allows you to act quickly, secure access to your equity, and borrow only what you need, without affecting your existing mortgage.

Smart uses for equity before the market turns

Using your equity is not just about having access to cash. It’s about using that cash for productive purposes while the market still works in your favor. Some strategic ways to use a HELOC include:

• Home improvements that increase property value
• Debt consolidation to replace high-interest credit card balances
• Education expenses or tuition financing
• Emergency fund access in a variable economic environment
• Down payment funds for investment properties or second homes

By securing a HELOC sooner than later, you give yourself financial flexibility in case the market becomes less favorable later.

Use our HELOC calculator

Why HomeEQ helps you act with confidence

HomeEQ is built for homeowners who want to access equity quickly and securely. While many traditional banks take weeks or require in-person appointments, HomeEQ offers a digital-first process tailored to speed and transparency.

HomeEQ benefits:

• Application takes minutes, with instant pre-qualification
• No appraisal required in many cases
• Transparent rate structure based on prime + margin
• Fixed-rate options for part or all of your balance
• Dedicated HELOC experts to guide your decisions

HomeEQ specializes in equity-based borrowing. That focus helps you move faster and more confidently than with traditional lenders. Check your HELOC rate in minutes.

Frequently asked questions: Tap home equity

Q: What happens to my equity if home prices fall?

A: If the market declines, your home’s value drops. That reduces your equity and may shrink the amount you can borrow through a HELOC.

Q: Can I tap my equity without refinancing my mortgage?

A: Yes. A HELOC lets you access equity without affecting your first mortgage or its interest rate.

Q: Is now a good time to get a HELOC?

A: If your home value is high and you have equity, it can be a smart time to secure access before the market shifts or lenders tighten standards.

Q: How long do I have to use my HELOC funds?

A: Most HELOCs have a draw period of 5 to 10 years, during which you can borrow as needed and only pay interest on what you use.

Q: Does HomeEQ require a home appraisal?

A: In many cases, no. HomeEQ uses modern valuation tools to estimate your property’s value and approve your credit line faster.