I Have $700K in Home Equity, but a $500K Mortgage. Can I Use the Equity to Pay Down My Home Loan?

Core Insights - The significant increase in home values, nearly 50% from $243,398 in November 2019 to $359,241 in November 2025, has led to a rise in home equity for many homeowners, which can be utilized for debt repayment or home improvements [2]. Group 1: Home Equity Understanding - Home equity is defined as the difference between a home's value and the mortgage or other secured debts against it, starting with the down payment and increasing as home values rise and mortgages are paid down [4][5]. - Homeowners can typically borrow up to around 80% of their home's value across all housing debt, but lenders charge interest on home equity financing, making it not free money [7]. Group 2: Using Home Equity - While it is technically possible to use home equity to pay down a mortgage, this often results in trading one type of debt for another, which may have higher interest rates, making it counterproductive [2][6]. - Refinancing the original mortgage may be a more beneficial option than borrowing against home equity to reduce mortgage size [2].