“WITH HOME VALUES IN MY AREA DROPPING RECENTLY, I’M WORRIED ABOUT LOSING THE EQUITY I’VE BUILT UP IN MY HOME. SHOULD I BE CONCERNED?”

The answer to that question depends on two factors: How much equity you’ve actually built up in your home and how long you plan on staying in your home. When looking at how much equity you’ve built up, you’ll need to factor in your original down payment and also how much principle you’ve paid off to date. If, let’s say, you put down at least a 10% down payment or have paid off at least 10% of your principle loan balance, you should be okay. In most areas, housing values have not dropped more than 10% and—according to the National Association of Realtors—aren’t expected to fall below that level. You may also want to subtract six percent from your home’s value since that’s generally the amount you’d pay in commission if you were to sell. As far as how long you plan on being in your home, keep in mind that most experts believe home prices have either already bottomed out or will do so sometime in 2008. Furthermore, housing prices have always risen nationally in any given five-year period. If you plan on staying in your home for at least that long, you should be able to regain equity—especially if you’re paying off principle on your loan. ∆