Friday, November 15, 2019

Mortgage Balance (UPDATE) - November 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 $868,999 (up $2,035 in the last 30-days). Looks like the real estate trend once again continues its march upward during the summer months as families look to purchase homes and move in before the new school year begins.  Although our family is looking for a larger home, we have decided to wait until the market cools off a bit and  delay our home search until next summer. We know interest rates may rise from current levels but since we want to come as close to an outright purchase as possible, the home price is actually more important than the current interest rates.  We are currently socking away as much as possible to make sure we borrow as little as possible. In addition, a deeper discount on our next home equals smaller tax liability. We pay enough taxes on our paycheck and everyday purchase, we don't need a huge property tax burden on top of that. :)  




Mortgage Balance (As of November 1st):
$223,655 (down $3,952 from September post)

Percentage Owed:
25.7% (down 1.1 since our September post)

Home Equity
$645,344 (up $24,425 from our September 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 7 years and 7 months (91 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 8 years and 7 months (101 months) left on our mortgage. Nevertheless, I would like to have it paid off in roughly 5 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, 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.

4 comments:

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  2. AFFJ -

    Love seeing the difference each and every month makes. Keep writing and inspiring!

    -Lanny

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  3. That's a great mortgage rate so I wouldn't pay it off too quickly. Yes, it's nice to get rid of the monthly obligation, but once your money is paid back to the bank, you can't get it out again without another loan. At the very least, I would line up a HELOC on the property before you retire (it will be hard to get one later without an income) and this way, you have access to money as needed. That's what we do on properties that we pay off, and it's a great way to smooth out expenses as needed.

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