Unlocking Your Home’s Potential

How a Home Equity Loan Can Fund Your Next Remodel

For many Prior Lake homeowners, the past several years has brought steady appreciation in home values—great news if you're considering a remodel. As property values rise, so does your home’s equity, creating an opportunity to reinvest in the place you already love. Whether you’re dreaming about a refreshed kitchen, finishing the basement, or upgrading your outdoor spaces, tapping into your home’s equity may be one of the most cost-effective ways to bring those plans to life.

What exactly is equity?

Home equity is the difference between your home’s market value and the amount you still owe on your mortgage. For example, if your home is worth $550,000 and your loan balance is $350,000, you have $200,000 in equity. With Prior Lake’s desirable neighborhoods, strong schools, and lakefront properties driving consistent demand, many homeowners may have more equity than they realize.

When it comes to using that equity for a remodel, three common lending options rises to the top: Home Equity Loans, HELOCs, and Cash-Out Refinancing. Each works differently, and the right choice depends on your goals.

A Home Equity Loan functions like a second mortgage with a fixed rate and predictable monthly payments. It’s ideal for homeowners who have a well-defined project—such as kitchen renovations or replacing windows—and want the certainty of a lump sum.

A Home Equity Line of Credit (HELOC) offers more flexibility. With a HELOC you can borrow as needed, which is a great option for ongoing or phased projects. This could be for a full basement finish or a series of energy-efficient upgrades. The line of credit is revolving, which allows you to pay back and reuse as often as needed during the draw period.

A Cash-Out Refinance replaces your existing mortgage with a new, larger one and provides the difference in cash. Homeowners often choose this option if current mortgage rates are more favorable or if they want to consolidate payments into a single loan.

In Prior Lake, some of the most popular remodeling projects include modernized kitchens, expanded mudrooms, improved decks, and basement transformations that add entertainment or guest space. Before choosing a financing option, consider the scope of your project, how quickly you’ll need funds, and whether you prefer fixed or flexible payments.

Your home is likely one of your greatest financial assets—and tapping into its equity can help you elevate how you live in it. If you’re exploring a remodel and unsure where to start, I’m always here to help you review your options and determine which financing path fits your vision.