HOME EQUITY LINE OF CREDIT

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A home equity line of credit, or HELOC, is typically the most common way to tap housing wealth, Hepp said.

A HELOC lets homeowners borrow against their home equity, generally for a set term. Borrowers pay interest on the outstanding balance.

The average HELOC has a 9.2% interest rate, according to Bankrate data as of June 6. Rates are variable, meaning they can change unlike with fixed-rate debt. (Homeowners can also consider a home equity loan, which generally carries fixed rates.)

For comparison, rates on a 30-year fixed-rate mortgage are around 7%, according to Freddie Mac.

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While HELOC rates are high compared with the typical mortgage, they are much lower than credit card rates, Elliott said. Credit card holders with an account balance have an average interest rate of about 23%, according to Federal Reserve data.

Borrowers can generally tap up to 85% of their home value minus outstanding debt, according to Bank of America.

Homeowners can leverage a HELOC to pay off their outstanding high-interest credit card debt, Elliott said. However, they must have a "very targeted plan" to pay off the HELOC as soon as possible, ideally within a year or two, she added.

For the people who owned their homes at least four or five years ago, on paper they're feeling fat and happy.

Lee Baker

CERTIFIED FINANCIAL PLANNER

In other words, don't just make the minimum monthly debt payment — which might be tempting because those minimum payments would likely be lower than those on a credit card, she said.

Similarly, homeowners who need to make home repairs or improvements can tap a HELOC instead of using a credit card, Elliott explained. There may be an added benefit for doing so: Those who itemize their taxes may be able to deduct their loan interest on their tax returns, she added.

Reverse mortgage

A reverse mortgage is a way for older Americans to tap their home equity.

Like a HELOC, a reverse mortgage is a loan against your home equity. However, borrowers don't pay down the loan each month: The balance grows over time with accrued interest and fees.

A reverse mortgage is likely best for people who have much of their wealth tied up in their home, advisors said.

"If you were late getting the ball rolling on retirement [savings], it's another potential source of retirement income," Baker said.

A home equity conversion mortgage (HECM) is the most common type of reverse mortgage, according to the Consumer Financial Protection Bureau. It's available to homeowners who are 62 and older.