And that could cause Dan to run up new debts. If he does he'll be making a critical mistake. It's also a good time to take a look at all of his expenses, to try to reduce spending and use the extra savings to pay off debt. Obviously if he owes less, any increase in rates will be less painful. If he's consolidating under a homeowner's line of credit there's another reason to try to reduce the total indebtedness.
Less debt means a lower rate.
Each lender is different so Dan will need to ask the lender where the rates change and what value they've put on his home. Finally, we can all learn something from Dan's situation. First, much as we hate to do it, we need to read and understand any loan application that we sign. We also need to look at any proposed borrowing and decide how high the payments could go. Clearly Dan's options were limited if his furnace died.