Monday, July 16, 2018

Mortgage Balance (UPDATE) - JULY 2018


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. 


HOME VALUE:
According to Zillow, our home is currently worth $864,213 (up $1,242 in the last 30-days). The traditional spring-summer spike in real estate continued to be great for property values, but the reality is whether or not it is up or down, it really doesn't mean much to us since we have no intention of selling our home.  We mainly post these updates to see the remaining mortgage balance and keep us motivated to push forward to be debt free (including our mortgage) one day!  


Mortgage Balance (As of July 1st):
$256,153 (down $1,982 from our June post)

Percentage Owed:
29.6% (down .4% from our June post)

Home Equity
$607,970 (up $6,280 from our June post)
   
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 8 years and 11 months (107 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 9  years and 9 months (117 months) left on our mortgage. Nevertheless, I would like to have it paid off in roughly 8-9 years. If we accomplish that, I plan to use the money we use to pay our mortgage and 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 6-8 years, we may consider using some of the 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.

10 comments:

  1. AFFJ, That's a nice chunk of home equity. I'm pretty debt averse, but with such a low interest rate I can see why you would not pay it off early and use the funds for better returns elsewhere.

    Thanks also for putting DD on your blog list!

    Tom

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    1. Right!? Its hard to put more towards principal when the interest is so low. :)

      Glad we connected. Look forward to following along on your journey to FI. Best wishes. AFFJ

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  2. With a 15 yr mortgage you are turning the corner and that equity owned is gonna start accelerating. Hope you and yours keep it up.

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    1. I must admit, it is pretty awesome watching the number balance drop simply by making the normal mortgage payment! ;) Thanks for stopping by.

      Best wishes and success on your personal journey as well. AFFJ

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  3. That really is a nice chunk of house you own there. I'm sure it won't be too long and you'll own the whole thing! Well done to you!

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    1. People tell us that 9 years goes by fast but since we count down each and every month, time seems to go by too slow. haha

      Appreciate the visit. Best wishes my friend. AFFJ

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  4. It's good to see the mortgage balance moving in the right direction. You make a great point about not paying down the mortgage early, at least not right now, given the low interest rate. I'm in a similar situation and trying to decide if I want to pay off my mortgage early. I've decided against it (for the moment), but who knows what the future holds.

    Looking forward to following your progress along the way.

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    1. Its a tough decision because it is a guaranteed 2.875% (compounded for the remainder of the loan life) vs. the potential returns (or losses) on other investments vehicles. At the end of the day, it is a choice of risk vs. reward and what you are willing to give up for the potential reward.

      Thanks for the comment. Best wishes and continued success on your personal journey! AFFJ

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  5. Hi AFFJ,
    I don't include the house value in my "wet worth" either as I only really track more liquid assets. Congrats on getting such a low interest rate!

    I must admit I enjoy looking at my monthly mortgage payment and seeing the principal payment amount increase a little bit more each month. How soon until the principal payment is greater than the interest payment, or have you reached that already?
    Wishing you all the best,
    -DL

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    1. Thanks. Unfortunately, we refinanced three times before we finally ended up with a 2.875% rate. We initially started with an interest rate above 6%. Good thing is we never paid points, but we did pay some fees each and every time.

      Believe it or not, the principal was greater than the interest from the very first payment (since our last refinance). It has been roughly 5 years since and we are slowly approaching the point where the principal will be twice what we pay in interest!

      Thanks for visiting. Best wishes and success on your personal journey! AFFJ

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