Unlocking Your Home’s Hidden Potential: How New Jersey Homeowners Are Using Home Equity to Fund Major Upgrades in 2025

The landscape of home improvement financing is experiencing a dramatic shift in 2025, with nearly 30% of U.S. homeowners considering tapping into their home equity in the next 12 months—a notable increase from 21% in 2022. This seven-point jump represents more than just a statistical trend; it reflects a fundamental change in how homeowners are approaching property improvements in today’s challenging housing market.

The Perfect Storm Driving Home Equity Usage

Several converging factors have created an ideal environment for homeowners to leverage their equity for renovations. Current homeowners don’t want to sell their properties and re-enter a housing market that has mortgage rates much higher than the sub-3% rates of the pandemic era, there is very high home equity in the U.S., and many homeowners tap into this home equity through a home equity line of credit (HELOC) for home renovations.

The numbers are staggering: home equity gains reached $115 billion in the first quarter of 2025, giving the average borrower about $302,000 to tap into. This wealth accumulation, combined with HELOCs and home equity loan interest rates trending down since late 2024 and currently averaging below 8.5 percent, making them a more cost-effective option than other financing routes like home improvement loans, personal loans or credit cards, has created an unprecedented opportunity for homeowners.

New Jersey Homeowners Lead the Charge

In New Jersey, where property values have consistently appreciated and homeowners have built substantial equity over the years, this trend is particularly pronounced. According to renovations marketplace Realm, it’s $49,000 cheaper on average to renovate an existing home and $79,000 cheaper to expand it than to buy a new one. For New Jersey residents facing some of the nation’s highest property prices, this cost differential makes home equity financing an attractive alternative to relocating.

The appeal extends beyond mere economics. The trends in home renovations show how the American dream has changed, with the big thing being this shift away from buying your dream home out of the gate—if you rewind the clock 15 years ago, people had big ambitions of buying an amazing house that would be perfect, but for millennials that’s just not the reality due to insufficient housing inventory.

Strategic Investment Opportunities

Homeowners are increasingly strategic about their equity-funded improvements. The MeridianLink survey highlights growing interest in equity-based borrowing, with motivations ranging from home improvements (45%) to debt consolidation (16%) and investment in other properties (16%). This data reveals that homeowners view their equity not just as locked-in value, but as a flexible financial resource.

For those considering significant upgrades, such as custom doors metuchen installations or other high-impact improvements, home equity financing offers distinct advantages. You can deduct the interest you pay on home equity loans and HELOCs annually on your tax return, provided the funds obtained have been used to purchase, repair or make significant improvements to the home securing the loan.

The Rise of Premium Home Features

With access to substantial equity financing, New Jersey homeowners are investing in premium features that were previously considered luxury items. Iron Door Kings, serving Middlesex and Bergen County, has witnessed this trend firsthand as homeowners upgrade their entryways with custom iron doors that combine security, energy efficiency, and aesthetic appeal.

These improvements increase property value with a distinctive, high-end feature that attracts buyers in the market, provide inherent security that resists forced entry, and reduce energy costs with thermally broken iron doors that minimize heat transfer. Such investments exemplify how homeowners are using equity financing to make improvements that pay dividends in both immediate enjoyment and long-term value.

Market Projections and Future Outlook

The home equity lending market shows strong growth potential. The market will grow to $34.73 billion in 2028 at a compound annual growth rate (CAGR) of 4.4%, with growth attributed to factors including the shift towards remote work, increasing real estate prices, a rise in home renovation activities, growth in residential properties, and higher disposable income.

For the broader home improvement industry, while the first half of 2025 may bring slow growth, the second half is shaping up to be a major turning point, with rising home equity, deferred remodeling projects, and potential interest rate relief setting the stage for a surge in demand, leading into what experts describe as a potential “Golden Age of Remodeling” in 2026-2027.

Making Smart Equity Decisions

While the opportunities are substantial, homeowners should approach equity financing strategically. Experts recommend exploring financing options by checking personal loans, home equity loans, or lines of credit, comparing rates and terms to save substantial amounts over the life of a loan, and prioritizing energy efficiency improvements that lower utility bills and may qualify for incentives or rebates.

The key is viewing home equity as a powerful tool for enhancing both lifestyle and property value. Whether investing in custom ironwork, kitchen renovations, or energy-efficient upgrades, New Jersey homeowners who leverage their equity wisely are positioning themselves to benefit from both immediate improvements and long-term appreciation.

As we move through 2025, the intersection of high home equity, favorable borrowing rates, and pent-up renovation demand creates a unique window of opportunity. For New Jersey homeowners considering major improvements, the question isn’t whether to tap into home equity—it’s how to do so most effectively to maximize both personal satisfaction and financial return.