You're living in a house you bought 10 years ago -- a house that has now tripled in value. And you have a 6 percent mortgage on that house -- less that half the going rate for mortgage money today.

So you look at your new neighbor, who just bought a house next door and whose monthly mortgage payment approaches $1,000. Then you think of your own $150-a-month tab (principal and interst only) -- and you sit there with a smug smile on your face.

Well, you're overlooking one of the least-understood facets of homeownership: the hidden cost of owning a house that has appreciated substantially in value.

The key word is "equity." To get the true cost of homeownership, you must factor into your calcuations the lost income on your equity.

Let's use a typical example to demonstrate the magnitude of this hidden cost. Suppose your house could now be sold for $95,000, and your mortgage balance is down to, say, $15,000. Your equity in the property -- the value of your ownership, as opposed to the bank's -- is $80,000.

If you sold the house right now, you might have around $70,000 in cash left after paying an agent's commission and the expenses of moving to an apartment. (If you're 55 or older, you would have no federal income tax liability on the profit.)

And if you invested that $70,000 in high-quality long-term corporate bonds, you could generate about $7,800 a year in interst -- with a net income after taxes of perhaps $5,400 (assuming a total federal and state tax bite of around 30 percent).

That's $450 a month you don't have now. So keeping your house is really costing you $450 a more a month than the obvious out-of-pocket cost of $150. If we allow an estimated $25 for the tax saving on the interest deduction, your true cost comes in at around $575 a month.

Now let's take another look at that poor neighbor of yours, who is paying a staggering $950 a month in principal and interest for a house that looks just like yours. Most of that monthly payment is going into interest only for at least the first half-dozen years.

Using the same 30 percent tax bracket as before, his or her cash-in-hand saving in income tax if about $250 a month. The true out-of-pocket cost for that high-rate mortgage, then, comes down to around $700.

Now you can see that in reality your neighbor's true monthly cost -- $700 -- is not a great deal more than your true cost of $575 a month. It is higher, of course -- but nowhere near the $800 difference that appears at first glance.

One can't belittle the emotional impact of shelling out $950 a month to the mortgage versus your payment of $150. And you don't really miss the income you forego; you've never had the $70,000 in cash, and may not even think of your equity in the house as an asset that could and should be producing income. y

But it's there, and it's yours if and when you decide to sell your house. (The resale market is in the doldrums now, but some houses will be sold anyway, and the market in general is expected to rebound after a while.)

This hidden cost of homeownership is often overlooked and just as often misunderstood. There are, of course, many other factors to be considered when you look at the choice between keeping or selling your home.

But as you review the financial aspects of this decision, don't forget to include this very important element -- the income potential of your equity.