Saturday, November 28, 2015

Mortgage Balance (UPDATE) - Nov 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: $763,963 (down $3,490 in the last 30-days). If you follow us, the reality is that whether our home prices rise or fall, it really doesn't mean much to our family as we have no intentions to sell or otherwise move.  We are very lucky to be able to say that we love were we are and couldn't see ourselves living and/or raising our family any other place. :)
Mortgage Balance (Nov.28):
$315,467 (down $3,675 from our last post)

Percentage Owed:
41.2 (up from 40.8% from our last post)

Home Equity:
$448,496 (down $14,038 from $462,5434 on our last post)

With the winter months cooling down the housing market, home price has surely taken a hit these past few months.  Our home price has dropped roughly $20,500) since the summer highs. As a result, out home equity fell has consistently fell during the last few months. 

Although we do track the home values and home equity in our home, the reality is that paying off our mortgage is the our MAIN goal. It is never fun to watch your home values or home drop, but just like any other long term investment, the decline is just a paper loss.  Unless you sell, which we have no plans to, the decrease in value shouldn't matter in the long run. Like stocks, housing market also goes through cycles. We are not day traders, nor are we house flippers, so the current cool down in the real estate market has not bearing on our long term goal of owning our house outright.  :)  

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 11 years and 9 months so we are setting out to pay off our mortgage on or before my retirement date. Right now we are a few months behind the target retirement date. Currently, we have approximately 12  years  - 6 months (152 months) 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:


  1. Nice well thought out strategy. I think it's a safe bet your investment account will grow at more than 2.875% over the next 10 years.

    1. Thanks Ben. Looking back, I would have considered buying less home though. Just not investing quite as much as I would like. :) But I when we bought the home, the plan wasn't for my wife to be a stay at home. Although she does bring some money with her side hustle, we still miss her full-time income. :)

      Thanks for stopping by and commenting. Regards. AFFJ

  2. Hi AFFJ -- you've got one of the greatest mortgage interest rates there, congratulations. (I realize it is partly due to being a 15-year mortgage). I like how you relate the balance to percentage ownership. Perhaps I should do this for our mortgage, too. We're in our new home for just more than a year now, and we probably don't even own 25% of it yet! One comfort is the value (according to Zillow) has risen by 40%. Even if Zillow is wrong by 25%, that's 32%!

    1. FerdiS - great to hear your home value has risen since you've moved in. Many people who have bought homes in the last 2-3 years have essentially seen instant equity as home prices have slowly rebounded in many parts of the US during the last 2-3 years.

      Yes, we do have one of the lowest mortgage rates around but I must admit, because our mortgage consumes a large portion of our income, it leaves less to invest and grow. If I were to do it again, I probably would have done a 20-year mortgage. Most people do either 15-year or 30-year but a 20-year mortgage does exist.

      We went with a 15-year mortgage because the time frame is more in line with our retirement goals. :)

      Thanks for visiting and commenting. Best wishes! AFFJ

  3. My husband and I have been thinking about retiring in the next two decades or so and we've just started looking at our net worth. We've been including our home equity in our net worth, but you're definitely right in not including it. We still have to pay off our mortgage, and you're doing much better at that than we are right now, but we shouldn't include our home in our net worth since we do plan to live the rest of our life in it. Thanks for that tip.

    Tasha Reeves @ West Coast Mortgage Group