Saturday, May 9, 2015

Mortgage Balance (Udpate) - May 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: $780,504 (up $676 since last month's post).  Home prices have steadily increased every month this year, the rise continued once again this past month.  This makes four consecutive months of increasing values.

As nice as it is to see our home values rise, but 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 (May):
$328,154 (down from $329,914 in April)
Percentage Owed:
42.0% (down from 42.3% in April)
Home Equity:
$452,350 (up from $449,914 in April)

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. :) 

The truth is that as long as my mortgage balance continues to go down consistently each month, I am happy. Nevertheless, our journey is currently laid out where if all we do is make our exact mortgage payment each month, the mortgage will be paid off a few months after my planned retirement date.  

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 12 years and 3 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 13  years  - 0 months (156 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. Hi AFFJ,

    It's always great to see your house price increase, even if it's just paper money! I check Zillow for mine monthly too but based on my experience, the Zillow price tends to be optimistic and I'd probably want to reduce the value by 6% for the realtor's commission if I started tracking it.

    I do the same as you in deliberately not paying the mortgage down; I take the same money and put it in a separate Vanguard Wellington fund that I'll use to pay the house early. If I mix that money with my regular income investments I know I'll be reluctant to sell anything!

    Best wishes,

    1. Hi Dividend Life...Zillow is a nice way to get a quick valuation of your home but, I agree, it is not always very accurate. And the typical 3% to buyer and sellers agent does eat away at about 6% as you very well noted. :)

      I think you are on to something there with a separate investment account that you could use to pay off the house early with. We currently do mix the money into our family's dividend stocks portfolio but think we will look into a separate account of ETFs and mutual finds for this purpose. Thanks for the idea. :)

      Thanks for stopping by...Best wishes my friend! AFFJ