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Moves to make


Always dreamed of being in the right place at the right time? You may be right now.

Is it time to cash out?

If your house has been going up, up, up in value, might it be a good time to sell -- before it starts going down, down, down?

In most cases, no.

"Housing prices are going to do what they're going to do," says Eric Tyson, author of "Mind Over Money: Your Path to Wealth and Happiness."

"It doesn't matter. It shouldn't make or break your ability to do things, unless you were counting on that equity to do something. It's really a paper thing."

Ric Edelman, a financial planner and author of "The Truth About Money," agrees. "A bubble is irrelevant unless you're selling," he says. "If you can make the monthly payment, who cares what the house is worth?"

He compares the situation to owning a car, which almost always goes down in value. But you don't buy it as an investment. Instead, you keep it "because you can afford it, and it's serving," he says.

Unlike other investments, your house is more than just a place to let your money grow. It's also the place you call home. So unless a dip in value would really hurt your bottom line, or you're planning on moving soon anyway, it's usually smart to hang on to the house and ride it out.

Time to cash out?
If values dip (or you think they might), it can be a good time to evaluate your situation. Some of the questions to ask:
7 questions to ask yourself
1. Are you happy where you are?
2. Are you already planning a move?
3. Do you have a manageable mortgage?
4. How stable is your income?
5. How much equity do you have?
6. What's happening in the local economy?
7. Do you live in the house?

1. Are you happy where you are?
Do you like the house? The neighborhood? The neighbors? The school system and local amenities? Is the house big enough (or small enough) to be comfortable now and in a few years? Does it have the features you need or think you might need? If not, are you leaning toward moving or renovating?

The problem with trying to time the real estate market and sell before a bubble bursts is you're trying to predict the future. You're gambling your present home and happiness for a lot of unknowns. Will a price dip actually happen? Will it be steep and sudden or a gradual softening? Short-term or sustained?

Trying to play the market is like trying to time a roulette wheel, says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University. And just about as practical.

Cashing out, "is something you associate with speculators, not the person who buys a home to live there," says Jack Guttentag, professor emeritus of finance at the Wharton School and author of "The Mortgage Encyclopedia."

While you always have the option of selling because prices might be going down, not many people do, says Dick Peach, vice president of the Federal Reserve Bank of New York. And there are good reasons for that, he says.

-- Posted: March 1, 2006
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