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Take your home equity and run

If you live in a high-cost metropolitan area, the equity in your current home can buy a heightened lifestyle somewhere else.

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While in certain parts of the country home prices have leveled off or headed south, housing price disparities in different regions mean that some people have more equity than others by virtue of their locations.

Extra equity is an added benefit to the American dream. You can manage this equity in one of several ways. You can sit on it and hope that the real estate market in your area doesn't tank. You can tap your equity and use it -- generally not a good strategy since you have to pay it back. Or you can cash it out and move to an area where the housing dollar buys more for the buck.

If you purchased property in a lofty market such as California or any of the regions in the Northeast, Southeast or Southwest that experienced strong appreciation, you might still be sitting on equity in excess of $100,000.

Particularly if you're working too hard to make the mortgage payment each month or if you just want more space -- whether indoors or outdoors -- an out-of-state move may be a solution.

"This is a wonderful strategy," says Sandy Abalos, CPA and managing partner at Abalos and Associates, a CPA firm in Phoenix. Several of her clients have done this recently with success.

Housing prices all over the map
The National Association of Realtors reported stark contrasts among several regions of the country in its third-quarter 2006 median existing-home prices.

2006 3rd-quarter median existing-home prices
Region Median price

Other areas of the country run higher and lower. In San Francisco, for example, the median home price is a whopping $749,400, and in Bridgeport, Conn., it's $466,600. Meanwhile, median prices are approaching the $120,000 range in Charleston, W.Va.; the $150,000 range in Champaign-Urbana, Ill., and $140,000 in Columbia, S.C. In certain parts of the country, you can still find homes well below $100,000 -- for instance, in Decatur, Ill., Youngstown, Ohio, and Elmira, N.Y.

A math equation in your favor
In White Plains, N.Y., the median price of a home was $558,600 in the third quarter of 2006, up from $387,300 in 2003. If someone had purchased a home there in 2003 and sold in the fall of 2006, the cashed-out equity would have totaled $171,300.

The seller's options: Pay cash for another house or upgrade to a larger one for the same price or less. "You can take the difference and live nicely in another part of the country," says Certified Financial Planner Doug Thorburn of Northridge, Calif.

Recently, the "Walters," a family of five in San Bernardino County, Calif., sold their 2,400 square foot home for $550,000. They had purchased the house in 2003 for $322,000. With the $228,000 profit, the Walters paid cash for another home of the same size in rural Georgia. They used leftover funds to pay off a vehicle loan and credit card debt. The Walters are now debt-free and their new home sits on 15 acres -- a lot more space than the small lot they owned in California -- for a fraction of the cost.

Next: "What's in it for the IRS? Not much!"
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