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With five-year home price appreciation gains in double-digits for all 50 states and interest rates at record lows, home owners wisely tapping equity need have little fear of a housing bubble.

The Office of Federal Housing Enterprise Oversight's Second Quarter House Price Index says the nation's housing market has enjoyed a nearly 39 percent rate of home price appreciation since 1997, with more the half the states and the District of Columbia enjoying a 5 percent growth in price appreciation during past year.

The federal over seer of Fannie Mae and Freddie Mac says any housing market downturn isn't likely to fall as far as prices have risen and over time, banking on real estate is not a risky investment.

"Even in these areas that sometimes demonstrate bubble type behavior, cumulative declines have almost always been much smaller in absolute magnitude than preceding increases during the upward portion of the cycle. Over a full cycle during a 12-year period in Boston (from the third quarter 1982 to the first quarter of 1995), for example, housing appreciated at a healthy annual average rate of more than 4 percent. In San Francisco and San Jose, yearly increases average between 2 and 3 percent annually during a complete up and down cycle (of about 12 years). So regardless of whether or not bubbles occur in given areas, housing has still generally been a good long-term investment," OFHEO reported.

Any loan tied to your home's equity is by nature an equity-depleting loan, but home owners can balance the equity risk and temper their bubble fears by tapping equity wisely.

Capital improvements and investments that provide an equal or better return on your money are the best ways to bank on your home say experts. Home improvements (that add value), education for the kids (to secure their financial future) and new business financing (for an income stream) are relatively better uses of equity than buying cars and boats, debt consolidation and vacations.

Some experts advise never using your equity, but to pay off your mortgage by retirement time so you can live "rent" free when your income is reduced and fixed.

The exception may be for emergencies and unforeseen events that might reduce your income or place added demands on your wages -- job loss, births, illness, injury, death and others. A equity credit line can help you sleep at night if you have nightmares about a job loss or a wage cut.

"If you are afraid of losing your job, get an equity loan now, while you are still employed. That extra cash could tide you over until a new job is found. The good thing about a line of credit is that you don't make a payment until you actually use the funds," said Joette Joseph, a branch manager with VP Alliance Title Company in San Jose, CA.

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