If you have viewed our family's Net Worth Page, you probably already know that it does not include the equity in our home. Although, we do realize that it is technically part of our overall net worth, we decided that since our home equity is not an asset that we can count on for income (unless we sell and buy something cheaper) we would exclude it from our net worth calculation.
For the purpose of this blog, we are more interested in documenting our loan balance rather than our home equity. With that said, we will use the current Zillow value as our estimated home value and use it to figure out the percentage we owe on our home. For those interested, we will include the amount of our home equity, but know that we are less concerned with the equity since we have no plans to cash out or otherwise sell our home. Our main goal is to pay off our home on or before my retirement date.
According to Zillow, our home is currently worth: $788,317 (up from $768,380 in June). The housing market in our area has been roaring in the last few months as we had a roughly $20K gain the month prior. It's nice to see home values go up but the reality is it is simply a paper gain until we actually go to sell our home. Meanwhile, the higher value translates to more property taxes.
Mortgage Balance (July 2014):
$345,379.00 (down from $347,098.15 in June)
Percentage Owed:
43.81% (down from 45.17% in June)
Home Equity:
$442,938 (up from $421,281.85 in June)
For those that have not read the Preface on our home equity, we currently hold a 15-year fixed rate mortgage at the incredibly low rate of 2.875%. My goal is to retire within 13 1/2 years so we are setting out to pay off our mortgage on or before my retirement date.
Although we don't consider home equity as part of our net worth, since I am sort of a statistics nerd, I still like to look at the numbers and draw fancy comparisons. :) This last month was an great month in that our home equity grew approximately $21,657. As for percentage owed, the number continues to decrease ever so slightly. The percentage dropped another 1.36% this past month. With our mortgage balance, I'll certainly accept that as a decent month. :) Plus, that is an annual decrease of 16.32%!
Click on the link below to view our mortgage balance history:
Mortgage Balance History
That's some fantastic appreciation! However, it's just a paper gain and increase on next year's taxes as you mentioned. I also don't get too thrilled with the increases to my property value but am still counting it for now on my net worth page. I'm also looking to pay mine off early. I'm in a 30-year fixed at 4.25%. Not the best rate but not that bad either. I will try to have it paid off in 8 years. I will likely target my primary residence before any rentals because it doesn't produce any cash flow.
ReplyDeleteAAI - Including home equity as part of one's net worth is the normal thing to do so I don't blame you. We thought about it, but in the end we decided not to include it in ours.
DeleteCompared to historical rates, 4.25% is still a very good rate for a 30-year fixed. And it sounds like the bank won't get all their interest from you anyhow because your paying it off like a 10-15 year mortgage! :)
Good luck with your goal to pay off your primary residence in 8 years (or less)! AFFJ