Several factors have contributed to this rising debt, including a weak economy, a bear market that has cut into retirement portfolios, and low interest rates that have reduced fixed retirement income. To make up for these losses, many people have loaded up on home-equity debt through fixed-rate loans and adjustable-rate lines of credit. Rates are enticingly low, and lenders have made it easy to apply for home-equity loans. 

Used in moderation and with care, home-equity loans can be a useful tool for retirees. The interest usually is tax deductible, and interest rates are less than most other forms of debt, especially credit cards. The average rate of a $30,000 fixed home-equity loan was 6.2 percent in late July, and the average rate for a $30,000 home-equity line of credit was 3.4 percent. That compares with a 14 percent average for credit cards.

But here are some precautions before you borrow too heavily against your home equity: First, you’re putting your home at risk. Unlike most other forms of debt, failure to make home-equity loan payments could put your home in foreclosure. If you borrow against your house to pay credit card debt, don’t run the balances back up. Otherwise, you’re merely piling up more debt and putting your home at risk.

Also keep in mind that, like credit cards, the interest rates on home-equity lines of credit are not fixed, so they can surge quickly when general interest rates start rising. Rates might be at record lows now, but they could start climbing in the coming year or two as the economy rebounds. How much they might go up is impossible to predict, but as recently as late 2000, interest rates on home-equity loans were about 10 percent.

Another factor to take into account is the health of home prices. Although the real estate market has been a consistent bright spot during the recent market and economic slumps, some experts fear a potential real estate bubble that could burst. If they’re right, and the value of your home plunges, you actually could find yourself with more home-equity debt than you have equity.

To avoid this, consider some alternatives. One option is to sell your home, move to a smaller and presumably less expensive place, and invest the profits for income. Another option is the reverse mortgage. Although this also is debt against the equity in your home (you can take money out in a lump sum, regular payments, or as a line of credit), the loan doesn’t have to be paid off until you sell your home or die. The best option, however, might be to better budget your expenses so you don’t have to borrow in the first place.

If you must take out a home-equity loan or line of credit, shop around. Interest rates and fees can differ substantially among lenders. For example, some lenders will opt to waive an application fee but charge an annual fee if the outstanding balance falls below a certain amount and charge a prepayment fee for paying back the loan within two or three years.

Also, be sure to shop carefully for a reputable lender. Predatory lenders target older people whom they suspect don’t understand equity loans very well and tend to charge extraordinarily high rates and fees. Some even have bankrupted homeowners.