From CNBC: 2024-06-10 16:10:39

Home equity in the U.S. is nearing all-time highs at over $17 trillion, with an average equity per borrower of $305,000. Many refinanced at low rates during the pandemic, leading to significant increases. However, borrowing against home equity may be challenging with higher interest rates.

One common way to tap into home equity is through a home equity line of credit (HELOC), which allows borrowing against equity with an average interest rate of 9.2%. While rates are variable, they are lower than credit cards. Homeowners can leverage a HELOC for renovations or to pay off high-interest debt.

For older Americans, a reverse mortgage offers a way to access home equity without monthly payments. Available to those 62 and older, a reverse mortgage can provide additional retirement income. Borrowers can receive funds as a lump sum, line of credit, or monthly installments, with repayment typically through selling the home.

Selling your home has historically been a way to access home equity for future investments. However, moving and downsizing may not be financially beneficial, due to the increased costs in real estate. Cash-out refinancing offers another option but should be carefully considered due to potentially higher interest rates and larger monthly payments.

Read more: Why high interest rates make it tough to tap home equity