Other consumers may be able to use home price appreciation to their advantage. Borrowers who want to put an end to rate-related worries altogether can fix the rate and payment schedule on their outstanding balances, too. About a third of U.S. banks offer what's called a fixed-rate option , too. You're locked in and it will guarantee your loan will be paid off in 10 to 15 years. Higher rates increase equity risk While these steps can help lessen the impact of rate increases, they can't eliminate it.
Experts caution that the higher interest rates go, the riskier home equity lines get.
Families with short-term adjustable rate mortgages and home equity lines are in particular danger because they'll face payment hikes on both loans if current interest rate trends persist. They should work toward paying off as much of their debt as possible before it's too late. Most home equities are tied to prime and we may see a half of a point increase to a full point increase. Bankrate Inc. All rights reserved.