Worry about interest rates? Not me!

In the past year, consumer credit, or non-mortgage loans to individuals rose $4.4 billion, or 2.5 percent at an annual rate, to $2.174 trillion. The figures suggest that Americans are using their credit cards to finance more purchases. You are probably wondering why I’m speaking about credit cards on this site. Rising interest rates and the slowdown in the rise of real estate values seem to be creating problems for those who want to borrow against their home. Today, extracting the untapped value of your home has become more expensive and could even be downright risky if the housing market continues to cool.

While increasing interest rates on your home home-equity line of credit can be a cause for extreme worry, I personally feel that there’s no need for worry… yet. Don’t think of taking any drastic steps– there are plenty of options available to help ease your debt.

Here are three options that experts are talking about:

• Pay more: Sounds crazy? Well try keeping the loan, and paying more per month so, you'll be paying down the principal balance. Try it and see the benefits
• Pay off: Pay off the line of credit with a fixed-rate home-equity loan. You lose some of the flexibility of line of credit but you have a fixed rate and fixed monthly payment.
• Re-fi: Try a cash-out refinance, in which you refinance your first mortgage and take out enough to pay off your line of credit. Don’t forget to take a little extra cash out for yourself.
• Smart option: Try paying off your first mortgage and your line of credit and combine them to reduce your overall monthly payments.

While none of these options are a ‘one size fits all’ kind of solution, you can assess your needs and choose the one that suits you best.