Monday, January 19, 2015

Mortgage Balance (Update) - January 2015

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: $776,325 (down from our December post). 2014 was a pretty good year overall for housing.  However, at least for the month of December, the housing market in our area appears to have cooled down some...I guess to match the temperatures of the winter. :) Personally, I think housing is somewhat seasonal with the spring and summer months being the more popular months to buy. 

Mortgage Balance (January 2015):
$335,136 (down from $336,849 in December)
Percentage Owed:
43.16% (up from 42.95% in December)
Home Equity:
$441,189 (down from $447,445 in December)

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. :) 

Unfortunately, our home equity decreased by more than $6K, essentially taking back the roughly $5K gains from December post and then some.  For percentage owed,  the number slightly increase, going from 42.95% to 43.16% during the past month.  This was simply a direct correlation to the decline to our home value.

But like the stock market, one shouldn't constantly look at the values.  As long as my mortgage balance continues to go down consistently each month, in the long run, I know we will be in a good position at retirement.  We love our home, our neighbors, the schools, local markets, etc. We have no plans to move anytime soon. 

Mortgage Background:
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. Right in line with my retirement goal, we have a little less than 13 1/2 years left on our mortgage. Nevertheless, I would like to have it paid off in another 10 years (or less). If we accomplish that, I plan to use the last few years to aggressively build our passive income to help supplement our retirement and defer tapping into the 457K as long as we can so it can continue to grow. 
Right now we are not putting any extra money towards the principal given our low 2.875% 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:

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