As you contemplate whether to stay in your current home or sell it so you can move into something larger, keep in mind that interest rates are at all-time low levels. As the economy recovers, interest rates will likely increase more quickly than new home prices. And a further drop in new home prices pales in comparison to the effect that a slight increase in interest rates will have on your monthly mortgage payment.

	Now	Later
Purchase price of a new home:	$300,000	$270,000 (10% drop in price)
Interest rate:	5.5%	6% (.5% increase)
Monthly mortgage payment:	$1,970	$1,973

As this example shows, even with a $30,000 drop in the purchase price of a new home from $300,000 to $270,000, a .5% interest rate increase brings the monthly mortgage payment to almost the same as what it was without the drop in home price. So taking advantage of historically low interest rates now is definitely a smart move.

(Calculations shown above are based on "Ignore the Headlines," Time magazine, February 25, 2008.)