Take the money and run

From Bankrate.com:

Does that big mortgage get you down? Take the equity and run

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

Although in certain parts of the country home prices have leveled off or headed south, housing-price disparities in different regions mean that some owners have more equity than others by virtue of location.

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 bought 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 be sitting on extra equity.

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 might be a solution.
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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 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.

Gina Grzelka and her husband sold a two-bedroom 1,350 square-foot house in the suburbs of Chicago and now live in a four-bedroom 3,000-square-foot house in Baldwinsville, N.Y. The price of their spacious new home was half the selling price of their Chicago area home.
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Note that the ratio between housing and the cost of living is not consistent everywhere.

“Before assuming that the cost of living and salary differentials have a parallel relationship, spend a little time doing some research,” says Barry L. Brown, president of Effective Resources in Holiday.

For instance, he notes, salaries run about the same in Tampa as in Nashville, Tenn. “However, the cost of living in Nashville for the same salary level is 92.8 percent that of Tampa,” he says.