Sunday, October 5, 2014

Mortgage Balance (Update) - October 2014

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: $781,435 (down from $849,688 in September post). The housing market in our area has been steadily climbing this year. Even though we've consistently seen gains every month this year, the gains seemed to have hit a wall this past month. 

As I has mentioned last month, I have my doubts on the accuracy of Zillow. The current Zestimate only proves my suspicions. According to Zillow, our home price dropped $34,077 (see snapshot below).  However, if you compare the current Zestimate with the one I posted in September with our home value at $849,688, the value of our home actually dropped a total of $68,253

Although nobody likes seeing the value of their home (or any investment for that matter) drop, the decrease is simply a paper loss.  Nothing is reality until you actually go to sell.  Since we love our home and may end up never selling, this paper loss really does not means much to us.  

Mortgage Balance (September 2014):
$340,261.45 (down from $341,961.35 in September)
Percentage Owed:
43.54% (down from 32.65% in September)
Home Equity:
$441,174 (down from $507,726 in September)

Even though 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. :) 

With that said, our home equity shrank this past month a total of $66,552 (10.89%) giving back some of the gains from previous months. As a result, our home equity is back below $500K. As for percentage owed,  the number increased from 32.65% to 43.54% due to the loss of home equity tied to home values decreasing.

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. We have a little less than 14 years left on our mortgage but I would like to have it paid off in another 10 years (or less) so I can use the last few years to aggressively build our retirement nest egg.  
Right now we are not putting any extra money towards the principal given our low interest rate. We feel that we could make our money grow faster by investing it and while keeping the money more liquid. At a certain point, maybe in 8-10 years, we may consider using money from our investment accounts to wipe out the remaining mortgage balance.  Until then, we will continue to grow that money outside, rather than have it locked into our home.
Click on the link below to view our mortgage balance history:


  1. AFFJ,
    Regardless of what Zillion estimates, you still have more than enough equity to cover the changes in their estimates? For your own reecords, do you keep track of comparable sales in the area? It might help to see how far off zillion is on their estimate during the month. I keep an eye on kbb and local dealership prices to estimate my cars value! I know a house is much different than a car though.

    regardless, it is great to have a a large chunk of your mortgage paid off. Keep up the great work and keep chipping away!
    Bert, one of the Dividend Diplomats

    1. Thanks Bert. We pretty much have our mortgage on auto-pilot. It's definitely nice having one less thing to worry about so we can spend more time researching and investing our savings. :)

      Cheers to a 15-yr fixed rate mortgage! :) AFFJ

  2. AFFJ,

    I've seen Zestimates all over the place. I'm not sure of the reliability/accuracy, but I suppose it gives you some baseline to work from.

    Great job paying down that mortgage one month at a time. Slow and steady is the name of the game. :)

    Best regards.

    1. Jason - Zestimates are definitely not 100% accurate but it seems to be the most popular online source.

      With our 15-yr mortgage, I love watching the numbers slowly drop each and every month. :)

      Thanks for visiting. AFFJ