Home equity is near a record high. Tapping it may be tricky due to high interest rate

cnbc.com:

Home equity is near all-time highs. But tapping it may be tough due to high interest rates, according to financial advisors.

Total home equity for U.S. mortgage holders rose to more than $17 trillion in Q1 2024, just shy of the record set in Q3 2023, according to new data from CoreLogic.

Average equity per borrower increased by $28,000 — to about $305,000 total — from a year earlier, according to CoreLogic. That's up almost 70% from $182,000 before the Covid-19 pandemic, said chief economist Selma Hepp.

About 60% of homeowners have a mortgage. Their equity equals the home's value minus outstanding debt. Total home equity for U.S. homeownerswith and without a mortgage totals $34 trillion.

The jump in home equity is largely due to a runup in home prices, Hepp said.

Many people also refinanced their mortgage earlier in the pandemic when interest rates were «really, really low,» perhaps allowing them to pay down their debt faster, she said.

«For the people who owned their homes at least four or five years ago, on paper they're feeling fat and happy,» said Lee Baker, founder, owner and president of Apex Financial Services in Atlanta.

Baker, a certified financial planner and a member of CNBC's Advisor Council, and other financial advisors said accessing that wealth is complicated by high borrowing costs, however.

«Some options that may have been attractive two years ago are not attractive now because interest rates have increased so much,» said CFP Kamila Elliott, co-founder of Collective Wealth Partners and also a member of CNBC's Advisor Council.

That said, there may be some instances in which it makes sense, advisors said. Here are a few options.

A home equity line of credit, or HELOC, is typically the most common way to