Friday, February 8, 2019

Mortgage Balance (UPDATE) - February 2019


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 $856,337 (down $7,130 in the last 30-days). The housing market throughout California appears to be slowing down. We are seeing more inventory and houses staying on the market for longer. Normally, this would be seen as bad news to most, but my wife and I are contemplating the possibility of moving. We both have aging parents whom may eventually need us to help care for them. Our home does not have a down stairs bedroom so that would be a huge problems since we can't realistically expect them to climb the stairs each and every day in the old age. Our plans may take us on a different path this coming year. Stay tuned! ;)




Mortgage Balance (As of February 1st):
$242,149 (down $2015 from our January post)

Percentage Owed:
28.2% (down .3 since our January post)

Home Equity
$614,188 (down  $1,944 from our January 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 4 months (100 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 4 months (110 months) left on our mortgage. Nevertheless, I would like to have it paid off in roughly 8 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 for as long as possible 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 5-7 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.

13 comments:

  1. How good. A few downsides but as long as your passive income is increasing it will definitely beat what your mortgage interest rate it. Keep it up!

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    1. We've had a pretty nice ride these last few years so I've been expecting this pull back in the California real estate market. But yes, with such a low interest rate, we figured it made more sense to invest our money as opposed to pay extra towards our principal.

      Appreciate the comment. Best wishes. AFFJ

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  2. You're mortgage is moving in the right direction. I've recently decided to pay off my mortgage early. Granted the interested is slightly higher than yours at 3.5%, but still pretty low overall. But, I'm doing a pretend refi where I pay off the 30-year fixed in 15 years (or less) without actually refinancing.

    I go back and forth whether I want to pay it off early, and when I think it's probably better to keep the 30 year time horizon, I use the fact that the interest rate is low and that I can make more in the stock market as justification for that approach - kind of like what you've done. I suppose only time will tell, if I've made the right choice.

    Finally, I might follow your approach and track the reduction of my mortgage payment on a monthly basis - to provide extra motivation and/or accountability. Thanks for the inspiration.

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    1. I can relate with our indecisiveness. I've struggle with the same idea of being mortgage free myself. But given the growth we've seen in our investments, I am reminded each month with the reason why it make most sense to keep building upon our investments.

      We also figured that at some point, should we choose, we could always cash out some or all of our investments and just pay off our mortgage then.

      But yes, tracking the mortgage payments and related equity does help in most months when the average home price doesn't drop too much. :)

      AFFJ

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  3. AFFJ -

    Hell yeah on the mortgage balance decline, look forward to this one each month.

    -Lanny

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    1. Thank Lanny! Me too. :)

      Appreciate the ongoing follow and support my friend. AFFJ

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  4. Your plan is quite similar to ours, as we are planning to be mortgage free as we go into early retirement but in a slightly different manner. We would like to move to a LCOL area for retirement, and our current equity should cover the purchase of a new home outright.

    Of course that might change, as we are currently dealing with some of those aging parent issues. My FIL has some serious health battles right now, and we have been helping him a lot. It hasn't reached a point of him needing to move in with us, but who knows what the future holds.

    I think they call that the sandwich generation, where you are caring for your own kids and also having to help care for aging parents.

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    1. That sounds like an appropriate term. It certainly can be a difficult place to be sometimes. Do the best you can to stay on course but remain flexible as only god knows what the future holds. The better prepared you are the more options you will have if or when the time comes. :)

      Best wishes. AFFJ

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  5. Thank you for sharing this blog.If you are looking for quick personal loans, then you can apply with us to avail the best low interest personal loans from our reliable financiers.

    ReplyDelete
    Replies
    1. Thanks for stopping by and leaving us with the link. For obvious reason, we are not interest in refinancing our current mortgage, but who knows, we may be in the market for a rental one day. :) AFFJ

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  6. AFFj,

    Thanks for sharing. I like your concept of tracking mortage payment and equity available on your home. That is a low interest, probably better off keeping it and investing in higher interest avenue like the market.

    Cheers
    Dividend pursuit

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    1. Thanks for the comment. That is exactly what we figured. Even if we grabbed a few more shares of AT&T, which is attractively priced and also paying a juicy dividend above 6%, it would seem more productive than paying down that mortgage, albeit with risk. :)

      AFFJ

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