Ahhhh, the primary residence.
Like most discussions on financial topics, this one can end up pretty polarized. And also like most discussions on financial topics, the “right” answer might not be the same for everyone.
Is it a sound investment? Depends on who you ask. I know people that bought tiny little things in 2007 and ended up completely underwater a year later. It took years to dig out from under it, and they were essentially stuck until they had some sort of equity in it.
Maybe they bought a house and it had some hidden problems that required a ton of work.
Or maybe THEY decided everything needed to be upgraded.
How does our house fare?
I made a major net worth adjustment today. Personal Capital allows you to link your address to Zillow for a house value estimate. Spoiler alert, it can be way off.
Zillow calculated ours around $291,000 as of this week. There’s just no way we could sell it for that much in this neighborhood with our next-door neighbors with a flourishing weed business (oh, hey, strangers at all hours of the day/night) and an assortment of office furniture in the front yard (-_-). We have counted 12 people at one point living in the 3 bd, 2 bth house. I digress, and yes, I’m bitter about it.
The market is high right now, so I averaged out estimates from 3 different online sources. I landed on a nice round $275,000. Even that might be a little high.
So it knocked down our net worth, but it’s just more accurate.
Onto the investment question– was it a good one for us? Well, right now, we have right around $100,000 in equity. I’d estimate we’ve put about $30,000 into it over the past 6.5 years as far as repairs and maintenance. Note: waterproofing a basement is expensive. Note 2: Do not let the sellers get away with not disclosing ongoing, major flooding problems (talk to a lawyer, that’s bullshit, and yes I speak from experience and previous naivete).
Over all, though, the “return” is not bad. It’s a modest home, and the market has turned in our favor recently. We’ll see where it is when we decide to move.
I will admit, it’s not, mathematically, the “correct” course, but we are taking little swings at the principal. I tend to round off to the nearest thousand each month. Right now, our $1300 mortgage payment is around $350 towards principal and $650 to interest. So I’ll pay another $650 or whatever to the next thousand that month towards the principal if we come in under budget overall.
I know that $650 would take us farther in the stock market, but I do like the feeling of paying the mortgage down a little faster.
Again, I think this is totally personal. For me, I don’t plan to be as aggressive as Dave Ramsey’s Baby Step 6 to pay off the mortgage, but I do enjoy seeing total interest saved in my nerdy little spreadsheet. So far, we’ve knocked 3 months and $2,475 in interest off the loan!
I like this one best, but there are a bunch online: https://www.mortgagecalculator.org/
What’s your stance on your home as an investment?
How do you feel about paying off your mortgage early?
-K