a) Manually position the sword elsewhere inside your modelling program, whatever point of the object is closest to 0,0,0 is what the object will be rotated upon, so placing the bottom of the sword at 0,0,0 in the modelling app will make the bottom of the sword where the object rotates.
b) Using memblocks, but Id guess this is far too advanced for you right now, if you dont think so do some searches on Memblocks and see what you can come up with.
c) Use a dummy object, hidden so the user cant see it. Add the sword as a limb to the object, offsetting the sword so that the handle is at the same position as the dummy object. Now rotate the dummy object instead.