Homeowners Tapped $47 Billion in Equity. Here Is How to Do It Without Losing Your Low Rate.
American homeowners tapped an estimated $47 billion in equity in the first quarter, the most for any first quarter since 2021, with roughly $11 trillion still sitting available. But the smart money is not refinancing. Thanks to the lock-in effect, owners are reaching for HELOCs and second liens to protect their low first-mortgage rates. Here is how to tap your East Valley equity without making an expensive mistake.
If you bought or refinanced an East Valley home between 2020 and 2022, you are likely sitting on two valuable things at once: a mortgage rate you will not see again for a long time, and a substantial cushion of equity from years of appreciation. A new report on home equity borrowing shows that homeowners across the country are increasingly tapping that equity, and the way they are doing it reveals a smart strategy worth understanding before you borrow a dollar.
Americans Are Tapping Equity Again
Homeowners pulled an estimated $47 billion in equity out of their homes in the first quarter of 2026, according to a report from Intercontinental Exchange. That is the highest first-quarter figure since 2021. And there is far more where that came from: an estimated $11 trillion in home equity is available to borrowers nationwide.
For the East Valley, where home values have climbed substantially since 2020, this is directly relevant. The national median existing-home price is now roughly 50% above where it sat in May 2020. Many local homeowners have built real, usable equity, often more than they realize. The question is not whether the equity is there. It is how to access it wisely.
The Lock-In Effect Is Driving Smarter Choices
Here is the most telling detail in the report, and it is a lesson in itself. The majority of equity borrowing now comes through HELOCs and home equity loans rather than cash-out refinancing. Why? Because of the lock-in effect.
Millions of homeowners hold first mortgages at rates well below today's market. Nearly two-thirds of second-lien borrowers in the quarter had mortgages originated between 2020 and 2022, when rates were dramatically lower than now. These owners are making a shrewd move: they are leaving their golden first mortgage untouched and adding a second loan on top, rather than refinancing the whole thing and surrendering that low rate.
This is the strategic heart of equity borrowing right now. If you secured a low rate in those years, that rate is an asset worth protecting. Tapping equity through a second lien instead of a cash-out refinance can let you access cash while keeping that valuable first mortgage in place. For many East Valley homeowners, that distinction is worth thousands.
Three Ways to Tap Your Equity
If you are considering accessing your equity, you have three main tools, and they work very differently. Understanding the tradeoffs is how you choose the right one for your situation.
One important note on the HELOC, because it surprises people. HELOCs usually carry a variable rate that moves with a benchmark, and they have a draw period, often five or ten years, when you may pay interest only. When that ends, you enter a repayment period and start paying principal too, which means your payment can jump significantly. That is not a reason to avoid a HELOC, but it is a reason to plan for it.
The Question That Matters Most: Why Are You Borrowing?
Before the mechanics of which loan, there is a more important question, and the financial experts in the report are blunt about it. Home equity is not free money. With borrowing costs still elevated, the reason for tapping your equity needs to be strong enough to justify the cost.
- Home improvements and repairs that add lasting value to the property
- Consolidating higher-interest debt into a lower-cost, secured loan
- A genuine investment or opportunity with a return that beats the borrowing cost
- A necessary, planned expense you have budgeted to repay comfortably
- Vacations or discretionary splurges you would pay interest on for years
- Covering routine living expenses, a sign you may be living beyond your means
- Anything that does not build value or improve your financial position
- Borrowing without a clear, comfortable plan to repay it
The logic is simple. If you use the funds for capital improvements on your home, you are reinvesting in an appreciating asset, which can make real sense. If you borrow against your house for a vacation, you could end up paying years of interest on a week away. And because your home is the collateral, the stakes are higher than with unsecured borrowing. Make sure the payments fit comfortably in your budget, every time.
How East Valley Homeowners Should Approach It
Put the pieces together and a clear, disciplined approach emerges for anyone in Mesa, Gilbert, Chandler, Queen Creek, San Tan Valley, Eastmark, or Apache Junction thinking about their equity.
First, get a real read on how much equity you actually have. Years of appreciation mean many East Valley owners are sitting on more than they assume. Second, protect a low first mortgage if you have one. In most cases that points toward a second lien rather than a cash-out refinance. Third, be honest about the purpose, favoring uses that build value or improve your financial position over discretionary spending. And fourth, run the real numbers so the payment fits your budget comfortably, including how a HELOC payment could change after the draw period.
This is exactly the kind of decision where a clear-eyed conversation pays for itself. The right tool depends on your rate, your equity, your purpose, and your budget, and getting it right can be the difference between a smart financial move and an expensive one.
It depends heavily on your current mortgage rate. If you locked in a low rate between 2020 and 2022, refinancing the whole loan to pull cash out could mean giving up that valuable rate, which is why most equity borrowers right now are choosing HELOCs and home equity loans instead. Those second liens let you keep your low first mortgage untouched while still accessing equity. If you do not have a particularly low rate to protect, a cash-out refinance may be worth considering. The right answer comes from comparing your specific numbers.
A home equity loan gives you a lump sum with a typically fixed rate and a fixed monthly payment, which makes budgeting predictable. A HELOC is a revolving line of credit you draw from as needed, usually with a variable rate that can move over time. HELOCs often have lower upfront costs, but they include a draw period followed by a repayment period when your payment can rise as you begin paying principal. The fixed loan suits a known, one-time expense; the HELOC suits flexible, ongoing needs.
It can be, if the purpose is sound and the payments fit your budget. Borrowing costs are still relatively elevated, so experts stress that the reason for tapping equity should be strong enough to justify the cost. Using funds for home improvements that add value or to consolidate higher-interest debt often makes sense. Borrowing for discretionary spending usually does not. Because your home secures the loan, the decision deserves a careful look at your full financial picture before you proceed.
Most HELOCs have two phases. During the draw period, often five or ten years, you can take money out and are typically required to pay only the interest on what you have borrowed. After that, you enter the repayment period, when you pay both principal and interest. Because you are now repaying the balance itself, the payment can jump significantly. On top of that, HELOC rates are usually variable, so the payment can also move with the benchmark rate. Planning for both shifts is essential before you open one.
Start with purpose and protection. Help clients see that home equity is not free money and that the use should justify the cost, favoring value-building purposes over discretionary spending. Then protect any low first mortgage by leaning toward a second lien rather than a cash-out refinance where it fits. Finally, stress-test the payment, including how a HELOC changes after the draw period. Pairing your guidance with a lender who can run the real numbers across all three options gives clients a complete, sound decision.
You may have more equity than you think, and a way to tap it that protects your low first mortgage. Let's compare a cash-out refinance, home equity loan, and HELOC for your East Valley home.
EXPLORE YOUR OPTIONSYour clients are sitting on equity and tempted to use it. Partner with a lender who helps them protect a low rate, pick the right tool, and borrow only when the numbers truly work.
PARTNER WITH JOHNCrossCountry Mortgage, LLC. Equal Housing Lender. NMLS #3029. This is not a commitment to lend. All loans subject to credit and property approval. Home equity, withdrawal, and price figures are from Intercontinental Exchange (ICE) and the National Association of Realtors as reported June 2026, and reflect national data; local East Valley values vary by community and property. Any loan secured by your home places that home at risk if you cannot repay; HELOC rates are typically variable and payments can increase after the draw period. This material is not financial, tax, or legal advice; consult appropriate professionals.
