Rising real estate values are increasing homeowners’ equity stakes. Your household wealth goes up just by living in your residence and paying your mortgage. Typically owners use that equity to generate a down payment on a move-up property purchase.

Another way to benefit from rising property values is to pay off other debts with a cash-out refinancing. You’ll accomplish this by taking out a new mortgage with a principal balance that’s larger than what you currently owe on your home.

You can reduce your total monthly debt cost by paying off high-rate credit cards. You’ll then have more funds to spend as you wish.


However, it’s important to use the funds produced with a cash-out refi to pay off debts. Spending home equity on non-essentials won’t provide you with any long-term benefits.

Even if you plan on moving in the near future, refinancing now could work to your advantage. Reducing your debts will improve your credit score – and that will let you obtain a lower rate when purchasing your next home.