U.S. Homeowners Now Have a Record $11 Trillion in Tappable Home Equity

And that buys them a world of options.

The fact that home prices are sky-high is a point of frustration for buyers, and it has been for many months on end. But for current homeowners, it's a great thing. And that doesn't just extend to those looking to sell their homes and walk away with a giant profit.

Even if you don't have any plans to sell your home in the near term, having a lot of equity in it buys you different options. And these days, U.S. homeowners are sitting on more equity than ever before thanks to soaring property values.

Home equity levels are way up

Home equity is calculated by taking the market value of your home and subtracting the balance you owe on your mortgage. If your home is worth $500,000 and you owe $300,000 on your home loan, you're left with $200,000 in equity.

Data firm Black Knight reports that as of April, U.S. homeowners had a collective $11 trillion in home equity. That's twice the previous peak in 2006, and it works out to an average of $207,000 in equity per homeowner.

How to make the most of your equity

If you have equity in your home, you have the option to borrow against it. First, you could take out a home equity loan or line of credit (HELOC) and use that money for whatever purpose you choose. While homeowners commonly borrow against their equity to fund projects like renovations or repairs, you can take out a home equity loan or HELOC and use the proceeds for any purpose.

There's also the option to do a cash-out refinance. With a regular refinance, you borrow the exact amount you owe on your mortgage. With a cash-out refinance, you borrow more than your remaining mortgage balance and receive a check for the difference. And as is the case with a home equity loan or HELOC, you can then use that money for any purpose.

Be careful when tapping your home equity

Borrowing against your home equity may seem like an appealing thing to do. But be careful when going that route.

First of all, when you take out a home equity loan or HELOC, or you do a cash-out refinance, the sum you borrow against your home is money that you'll need to repay. You could run into trouble if you fail to keep up with those payments. And, if you tap too much of your equity, you could land in a dangerous financial situation if home values drop and you need to sell your property.

Meanwhile, right now, many financial experts are sounding warnings about a potential recession. And so in light of that, you may want to think twice about tapping your home equity.

If you are going to go that route, do so for the right reasons. A vacation may be nice, but you probably shouldn't borrow against your home to take one. On the other hand, if your home desperately needs a new roof, tapping your equity to make that happen is certainly a reasonable thing to do.