A picture of a silver cookie cutter in the shape of a house on a bright green background.

© Thomas Barwick - Stone / Getty Images

Homeowners are seeing record levels of equity in their properties, and many plan to tap into some of that newfound wealth.

Mortgage holders have an average of about $185,000 in home equity, according to research from Black Knight. That amount assumes retaining a 20% stake in the property.

The options to draw money from a home are typically cash-out refinancing, home equity lines of credit, and reverse mortgages. Homeowners aged 62 and over have been using equity from their homes more often, driven mostly by cash-out refinances, according to Urban Institute research.

“As interest rates rise in the coming year, you could see folks using more second lien products … to tap some of that equity when they need it,” Karan Kaul, principal research associate at the Urban Institute’s Housing Finance Policy Center, told CNBC. “Folks already have a very low rate, and as rates rise, it’s not going to be economical for most of them to refinance.”

Kaul predicts a shift from cash-out refinances to HELOCs, which are often used to remodel a home.

But Greg McBride, chief financial analyst at Bankrate.com, says that even as more homeowners consider leveraging equity in their home, they should remember that it isn’t 2005, when equity lending policies were looser. He says lenders aren’t allowing homeowners to pull out “every last nickel of equity that you have. Just because you have home equity doesn’t mean you can borrow from it,” he told CNBC. Most lenders will require owners maintain at least 20% equity in their home.