Rising interest rates unnerve homebuyers.

• Position: Your Life

For many American families, their home is not only their castle, it has become the equivalent of their stock portfolio, retirement account, and ATM machine. Families who do not own homes want a piece of that action, and many who already own want a bigger one. Yet, rising interest rates could stifle those dreams. What is the best way to protect yourself?

To answer that question, financial planners first caution that any housing decisions always should be made not just on the basis of interest rates, but in the context of particular needs and circumstances. For instance, a fear of rising interest rates may push renters into buying soon, before "it's too late." Yet, they need to consider several factors first. Can they really afford a home, or at least the home they want? Will coming up with the down payment (such as by raiding their retirement funds) or the monthly house payments jeopardize other financial necessities? Will they have to pay exorbitant interest rates because of bad credit, when their priority should be fixing up their credit, not buying a home? Do they anticipate living in the new home for just a short time? Such a stay could prove expensive because of the buying and selling costs. Moreover, you may be forced to sell into a high-interest-rate market that has stalled or depressed housing prices.

Should I sell my current home and buy another before rates rise further...