Author Topic: Home equity as a percentage of net worth?  (Read 35371 times)

Suncoast

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Re: Home equity as a percentage of net worth?
« Reply #50 on: May 29, 2015, 04:42:22 AM »
9% for me, assuming home value equal to price I purchased it for last year.

RetiredAt63

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Re: Home equity as a percentage of net worth?
« Reply #51 on: May 29, 2015, 06:13:58 AM »
Vaguely roughly 5% - based on net value (rough guess) and net worth (basing pension on what it would cost to buy the equivalent annuity).  But I am retired, so my house should not be a big % of my net worth, or what do I have to live on?

I think it is useful to put net value of a house in net worth, because it is an asset, even if a not very liquid one in anything but a hot market.  If you end up selling it and investing the proceeds, that is income that is available for rent.

GuitarStv

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Re: Home equity as a percentage of net worth?
« Reply #52 on: May 29, 2015, 06:26:58 AM »
80-90%

It is part of my net worth, but it's excluded when calculating a safe withdraw rate.

Sweet, someone with more cash in their shack than me!

Bardo

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Re: Home equity as a percentage of net worth?
« Reply #53 on: May 29, 2015, 07:18:07 AM »
5.2% (I'm precise with my net worth numbers).  That said, I have a chunk of liquid investments that will be dedicated, along with the equity in my current house, towards paying cash for a new house when I retire in a year or so. 


spokey doke

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Re: Home equity as a percentage of net worth?
« Reply #54 on: May 29, 2015, 07:23:28 AM »
Paid off.
Not included in NW.
About 11% of stache.

happy

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Re: Home equity as a percentage of net worth?
« Reply #55 on: May 29, 2015, 07:42:22 AM »
80-90%

It is part of my net worth, but it's excluded when calculating a safe withdraw rate.

Sweet, someone with more cash in their shack than me!

Now there's 2 people with more house than I : I'm at 63%

Thedudeabides

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Re: Home equity as a percentage of net worth?
« Reply #56 on: May 29, 2015, 07:46:49 AM »

Paid off.
Not included in NW.
About 11% of stache.

Why don't you include it in your NW?

Cougar

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Re: Home equity as a percentage of net worth?
« Reply #57 on: May 29, 2015, 07:57:36 AM »

Mine's low, about 8%; but I'm surrounded by houses and townhouses going for 500,000 to several million in an older condo complex. it'll go up when I go fire an actually get a house and not just a place to commute to work and back, but its a good neighborhood so I stay until then. I will not pay to live in more house than I need to go to work and back.

arebelspy

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Re: Home equity as a percentage of net worth?
« Reply #58 on: May 29, 2015, 07:59:12 AM »
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D
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Re: Home equity as a percentage of net worth?
« Reply #59 on: May 29, 2015, 08:25:57 AM »
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D

My house was bought in the last 2 years, so well past when the market went sour. 

(The house we owned at that time was worth so little that it basically didn't change value.)

Kris

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Re: Home equity as a percentage of net worth?
« Reply #60 on: May 29, 2015, 08:28:04 AM »
I don't count it at all, partly because I don't really know how much equity I have.  I assume it's around $10-20,000, though (bought at the height of the market in 2006, not sure how much I could sell for today).  So, that doesn't feel like enough for me to bother including in my NW, especially because I'm not sure of it. 

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Re: Home equity as a percentage of net worth?
« Reply #61 on: May 29, 2015, 08:28:18 AM »
Mine is 20% of my net worth. One should really look at the numbers and not percentage as say for example of home equity makes up say more than half your net worth, that may be fine because perhaps your home had appreciated greatly in value and at the same time home equity as a low or 0% of net worth may not be that great.  It's all about the physical numbers, not necessarily percentages.

Terrestrial

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Re: Home equity as a percentage of net worth?
« Reply #62 on: May 29, 2015, 09:19:17 AM »
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D

I somewhat feel your pain - we bought our first house at a bad time ('07) and were in that situation for quite a while. 

Fortunately a few years ago we were able to save enough to upgrade while the market was still low and turn our underwater house into a rental to pay the mortgage for a while.  We actually just sold that one a couple months ago - it had recovered some to the point where we at least had positive equity on it at the time of sale (barely, after commissions), but we still lost money on the whole from the purchase price. 

 

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Re: Home equity as a percentage of net worth?
« Reply #63 on: May 29, 2015, 09:24:09 AM »
I'm okay with it, it was a stupid purchase.. I'm just very surprised that of dozens of other responses, no one else is underwater.  I'd have figured a few would be.
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thd7t

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Re: Home equity as a percentage of net worth?
« Reply #64 on: May 29, 2015, 09:31:14 AM »
I'm okay with it, it was a stupid purchase.. I'm just very surprised that of dozens of other responses, no one else is underwater.  I'd have figured a few would be.
Maybe they aren't as secure about it as you are.  Of course, I'm insecure about having a high percent of my NW made up of Home Equity. 

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Re: Home equity as a percentage of net worth?
« Reply #65 on: May 29, 2015, 09:59:38 AM »
I'm okay with it, it was a stupid purchase.. I'm just very surprised that of dozens of other responses, no one else is underwater.  I'd have figured a few would be.

My area never had the run up and when the market dropped, it dropped like a rock. Thing is, its screaming hot right now so even people who bought at the height of the market in my area are not underwater. Look up Denver, CO if you want to get an idea of what I am talking about...My neighborhood you can sell over one weekend if you want to...

Villanelle

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Re: Home equity as a percentage of net worth?
« Reply #66 on: May 29, 2015, 10:20:47 AM »
Very roughly it is about 30-40%.  We don't live in it anymore, however, and it is now a rental. 

As for not being underwater, we are down about $57,000 from the purchase price, which isn't so bad considering that at one point, we were down about $150,000.  But we put a lot down and have owned it for about 8 years and have a <30 year loan, so we still have a decent amount of equity. 

(And while those numbers and the *very* roughly half a million dollar price tag sound Fancypants, this is a high COLA area where a >2000sqft townhouse costs that much.)

Kris

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Re: Home equity as a percentage of net worth?
« Reply #67 on: May 29, 2015, 10:22:47 AM »
I'm okay with it, it was a stupid purchase.. I'm just very surprised that of dozens of other responses, no one else is underwater.  I'd have figured a few would be.

My house hasn't regained all of its value since I bought it in 2006, but I did throw enough money at the mortgage that I'm no longer underwater on the loan.  I bought it for $209,000, and I'd say I could sell it for about $160-170 today.

Jack

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Re: Home equity as a percentage of net worth?
« Reply #68 on: May 29, 2015, 10:27:30 AM »
I bought after the crash, so my home value has increased somewhere between 50% and 150% of what I paid. Between that and the fact that my student loan balance is a little bit higher than my investment balance, my home equity is (weirdly) potentially higher than my net worth!

frugalnacho

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Re: Home equity as a percentage of net worth?
« Reply #69 on: May 29, 2015, 10:34:18 AM »
About 67%.  We have 2 houses.  They have both appreciated since we purchased them.

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Re: Home equity as a percentage of net worth?
« Reply #70 on: May 29, 2015, 11:14:42 AM »
0%

Sold for a loss 4 years ago. One of the best decisions I ever made.

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Re: Home equity as a percentage of net worth?
« Reply #71 on: May 29, 2015, 11:51:03 AM »
Figuring if I had to sell it quickly-16%.

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Re: Home equity as a percentage of net worth?
« Reply #72 on: May 29, 2015, 11:58:47 AM »
I bought after the crash, so my home value has increased somewhere between 50% and 150% of what I paid. Between that and the fact that my student loan balance is a little bit higher than my investment balance, my home equity is (weirdly) potentially higher than my net worth!

I bet this is true of a lot (most?) of people who own homes and are in debt.

Let's say you have no assets other than your house (true of people with no savings and no investments.) Let's say you bought a house for $240k and put 40k down. You have $40k in equity, owe $200k on the house, $40k in your student loan, $10k on your credit card.
Your home equity 40k > your net worth -210k.

CommonCents

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Re: Home equity as a percentage of net worth?
« Reply #73 on: May 29, 2015, 12:02:53 PM »
I bought after the crash, so my home value has increased somewhere between 50% and 150% of what I paid. Between that and the fact that my student loan balance is a little bit higher than my investment balance, my home equity is (weirdly) potentially higher than my net worth!

I bet this is true of a lot (most?) of people who own homes and are in debt.

Let's say you have no assets other than your house (true of people with no savings and no investments.) Let's say you bought a house for $240k and put 40k down. You have $40k in equity, owe $200k on the house, $40k in your student loan, $10k on your credit card.
Your home equity 40k > your net worth -210k.

Except the house is still an asset - it's just an asset with a liability.

Home equity is 40k
Net worth: Assets - Liabilities = 240K house - 200k house mortgage - 40k student loan - 10k credit card = -10k (not -210k)

thd7t

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Re: Home equity as a percentage of net worth?
« Reply #74 on: May 29, 2015, 12:20:20 PM »
I bought after the crash, so my home value has increased somewhere between 50% and 150% of what I paid. Between that and the fact that my student loan balance is a little bit higher than my investment balance, my home equity is (weirdly) potentially higher than my net worth!

I bet this is true of a lot (most?) of people who own homes and are in debt.

Let's say you have no assets other than your house (true of people with no savings and no investments.) Let's say you bought a house for $240k and put 40k down. You have $40k in equity, owe $200k on the house, $40k in your student loan, $10k on your credit card.
Your home equity 40k > your net worth -210k.
That looks like a misunderstanding of net worth.  The mortgage debt is secured by the home, so in this case, NW would be -10k.  That's why, if you include mortgage debt in your NW, you should include home value.  Allowing your home to foreclose would eliminate the debt (and the equity).  Stache and NW aren't the same thing, but in terms of NW, a house is an asset.  It doesn't earn anything, but cash has that failing (although I do understand that it is liquid)

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Re: Home equity as a percentage of net worth?
« Reply #75 on: May 29, 2015, 12:35:51 PM »
Thanks for the correction.  I would still think with high student loans and possible consumer debt it isn't uncommon for equity to be higher than net worth.


So now, my percentage is off that I posted before, but I really don't care enough to fix it.

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Re: Home equity as a percentage of net worth?
« Reply #76 on: May 29, 2015, 12:40:55 PM »
My home equity is about 1/2 my net worth.   I bought my house in 1999 before house prices climbed dramatically during the bubble, and I was fortunate that unlike many other places in the country, my house value didn't really tank all that much during the financial crisis.   I guess that is one of the benefits of living in a high COL area.   My house is worth twice what I bought it for 16 years ago. 

Dicey

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Re: Home equity as a percentage of net worth?
« Reply #77 on: May 29, 2015, 01:04:00 PM »
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D
Ah, ARS, I like you so much, I'll de-lurk and play. We just sold my parent's house in SoCal. They purchased it 7/05 for 285,500. It closes today for a purchase price of 227,500. Note that this was an all-cash, no broker sale, so even though Zillow lists the value at 232K, we're still getting a fair market price net/net. The buyer was a neighbor and a probate attorney, so it was an easy transaction.

My parent's house was a new build and there are only three floorplans in their Del Webb development, so Zillow is probably pretty accurate. Before anyone starts boo-hooing, they sold the house we grew up in on 6/05 for 440k. It re-sold 9/14 for 220k. Ouch!

I think the fact that you are standing on your committment to the purchase price is admirable, ARS. IIRC, you're in the absolute epicenter of the real estate meltdown. Eventually, it will come back and you'll be able to enjoy the peaceful slumber of the righteous. Good on you.

As to the OP's question, we're in the middle of our first house flip, so I have no idea how to calculate this. We live in a paid-for >$1M clown house and own a rental property with about 50% equity (not the flip), I'd guess it's around 50% overall. Hey, CA real estate is expensive! Since the 50% of our NW that's not real estate is still a (to me) big-ass number, I'm not too worried about the actual percentage. I just know it's enough.

BlueHouse

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Re: Home equity as a percentage of net worth?
« Reply #78 on: May 29, 2015, 01:04:45 PM »
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D

To be fair, ARS, you are willing to be leveraged a bit more than the average Joe.  I'm not technically underwater because of a 20% down payment + above minimum payments for 5 years, but my condo is still valued at about $50k less than what I paid for it.  And despite all the advice to sell it immediately (because I'm renting it out at a loss), I'm still holding hoping for it to bounce back. 

arebelspy

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Re: Home equity as a percentage of net worth?
« Reply #79 on: May 29, 2015, 01:14:17 PM »
...seriously?  I'm the only one under water so far, everyone else is positive percentages?  :D
Ah, ARS, I like you so much, I'll de-lurk and play.

Yay! :)  Bummer about the parent's house.

I think the fact that you are standing on your committment to the purchase price is admirable, ARS. IIRC, you're in the absolute epicenter of the real estate meltdown. Eventually, it will come back and you'll be able to enjoy the peaceful slumber of the righteous. Good on you.

I'm definitely paying my debts, which includes a full mortgage on a property not worth that, but it won't come back, we're going to sell before then, so we'll probably come out of pocket ~25k when we sell (rather than do a short sale or walk away or whatever).  Oh well, pretty small in the grand scheme of things.  :)

To be fair, ARS, you are willing to be leveraged a bit more than the average Joe.

Am I?  I'm at 30% LTV currently (aka equivalent to a 70% down payment on my whole portfolio).  I never put down less than 25% on any investment property.

You might be assuming things that aren't true...  :)
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aspiringnomad

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Re: Home equity as a percentage of net worth?
« Reply #80 on: May 29, 2015, 01:29:05 PM »

BlueHouse

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Re: Home equity as a percentage of net worth?
« Reply #81 on: May 29, 2015, 02:40:41 PM »
To be fair, ARS, you are willing to be leveraged a bit more than the average Joe.

Am I?  I'm at 30% LTV currently (aka equivalent to a 70% down payment on my whole portfolio).  I never put down less than 25% on any investment property.

You might be assuming things that aren't true...  :)
You are correct, I did assume.  My apologies there.  From previous posts on why you don't want to pay down your mortgage early, I've made many assumptions, and clearly I was mistaken.  You do not seem to be as risk tolerant as I had thought. 
Interesting. 

NotJen

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Re: Home equity as a percentage of net worth?
« Reply #82 on: May 29, 2015, 02:53:50 PM »
about 35% and falling.

Same.
Another 35%-er.  No mortgage, and I assume value is no more than my purchase price.

This has already dropped 3% since Jan 1!

arebelspy

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Re: Home equity as a percentage of net worth?
« Reply #83 on: May 29, 2015, 03:14:32 PM »
You are correct, I did assume.  My apologies there.  From previous posts on why you don't want to pay down your mortgage early, I've made many assumptions, and clearly I was mistaken.  You do not seem to be as risk tolerant as I had thought. 
Interesting.

No worries.  :)

I'm very risk tolerant (aggressive, even, when one is early on in their accumulation phase), but it has to come at the right price and make sense.  There are times it does, and doesn't, and very much depends on the situation.

But yes, paying down one's primary residence at a sub-4% rate that's fixed for 30 years?  I think that's almost always sub-optimal.  :)
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monarda

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Re: Home equity as a percentage of net worth?
« Reply #84 on: May 29, 2015, 03:15:46 PM »
Including rental properties, either 50% or 15% depending on how to calculate

50% if NW= primary residence equity / [cash+ securities + total equity in all properties- outstanding mortgage balance of all properties]

15% if leave out mortgage balances...  = primary residence equity/ [cash+ securities+ total equity in all properties]

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Re: Home equity as a percentage of net worth?
« Reply #85 on: May 30, 2015, 05:27:44 AM »
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

I hear zillow can be pretty accurate in some cities but for the most part its pretty far off in most cities. I wouldnt use zillow at all where I'm from.  The only way to get an actual estimate of what your home is worth is through actual MLS comparisons of recent houses sold in your neighborhood.

They don't even notice that I have a house.  I'd say for me they're way off.


Same here, and they're never likely to notice since we don't intend to sell.


We recently dropped below 50%, which is pretty cool. That's my own wild-ass guess (own it outright) and includes the value of the acreage, though.

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Re: Home equity as a percentage of net worth?
« Reply #86 on: May 30, 2015, 07:26:40 AM »
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

I hear zillow can be pretty accurate in some cities but for the most part its pretty far off in most cities. I wouldnt use zillow at all where I'm from.  The only way to get an actual estimate of what your home is worth is through actual MLS comparisons of recent houses sold in your neighborhood.

They don't even notice that I have a house.  I'd say for me they're way off.


Same here, and they're never likely to notice since we don't intend to sell.


We recently dropped below 50%, which is pretty cool. That's my own wild-ass guess (own it outright) and includes the value of the acreage, though.

My valuation is a WAG too -- based on what we paid for the land and later the house.  Like you: I don't intend to sell or cash out the equity.  I track both "net worth" and "Financial net worth".  (The latter a term I made up that excludes non-financial assets like house/cars/etc.)  I do all my FIRE calculations with the financial NW sum.

mickeyj

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Re: Home equity as a percentage of net worth?
« Reply #87 on: May 30, 2015, 07:43:15 AM »
I've included my home even though it's not an investment property.

It's more than 50% of my net worth now because I've just found MMM this year.

Insanity

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Re: Home equity as a percentage of net worth?
« Reply #88 on: May 30, 2015, 07:45:34 AM »
The refi is complete.  Of the new appraised value, the equity is roughly 18-20% of our net worth.   

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Re: Home equity as a percentage of net worth?
« Reply #89 on: May 30, 2015, 08:57:32 AM »
My current equity in my home after reducing the potential sales price for selling costs is about 23% of my total net worth. Plan to have the house paid off within two years. At that point, it will represent approximately 29% of my total equity.

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Re: Home equity as a percentage of net worth?
« Reply #90 on: May 30, 2015, 03:23:51 PM »
Mine is 23% using Zillow.  No mortgage debt.

Be careful using Zillow.  I track my home value and net worth monthly and in mid 2014 my home value increased significantly for about 6 months then fell again.  If I now look at the historical trend on Zillow, it does not reflect the increase in 2014.  It is as if it never happened, but the values in my spreadsheet were recorded from the Zillow site the day I entered them.

I hear zillow can be pretty accurate in some cities but for the most part its pretty far off in most cities. I wouldnt use zillow at all where I'm from.  The only way to get an actual estimate of what your home is worth is through actual MLS comparisons of recent houses sold in your neighborhood.

They don't even notice that I have a house.  I'd say for me they're way off.


Same here, and they're never likely to notice since we don't intend to sell.


We recently dropped below 50%, which is pretty cool. That's my own wild-ass guess (own it outright) and includes the value of the acreage, though.

My valuation is a WAG too -- based on what we paid for the land and later the house.  Like you: I don't intend to sell or cash out the equity.  I track both "net worth" and "Financial net worth".  (The latter a term I made up that excludes non-financial assets like house/cars/etc.)  I do all my FIRE calculations with the financial NW sum.

I want to be conservative in my calculations, so I compute home equity based on the amount I paid for the house, reduced by 6% for the eventual selling costs. 

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Re: Home equity as a percentage of net worth?
« Reply #91 on: May 30, 2015, 03:30:06 PM »
20.5%, no mortgage.... At least its 20.5% until the big earthquake happens on the west coast..:)

ender

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Re: Home equity as a percentage of net worth?
« Reply #92 on: May 30, 2015, 03:48:18 PM »
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.


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Re: Home equity as a percentage of net worth?
« Reply #93 on: May 30, 2015, 04:02:38 PM »
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

Won't that also put you into double digits?

monarda

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Re: Home equity as a percentage of net worth?
« Reply #94 on: May 30, 2015, 04:27:39 PM »
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

What Spork said.

Also,  perhaps many of us "double digit" folk have owned our houses quite a while by now.  June 15 will be 20 years in my primary residence. and we've owned our rentals for 13 years each.

EngineerMum

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Re: Home equity as a percentage of net worth?
« Reply #95 on: May 30, 2015, 06:35:35 PM »
Some of the percentages are phenomenal to me - the idea that you could own a house for less than 20% of net worth

The question was about equity, not home value.  If you get a zero down mortgage your equity could be zero percent of a multi-million dollar net worth or a $1 net worth.

I'm my case, we bought a house for 20 percent down last year.  The home would sell today for about 30 percent of our net worth, but since our equity in it is less than the purchase price, we only have about 8 percent of our net worth tied up in it.  Would be six percent (20 percent of 30 percent) if we hadn't made any payments over the past year.

I get that, but again - different environment. Since in Aus there is no tax deduction for primary residence, plus our interest rates are still WAY higher than yours - around 6 - 7% for mortgages - there is far more incentive to pay it off. So most people would prioritise paying down the mortgage above investing, hence building up other investments before paying down the mortgage a bit would be unusual.

arebelspy

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Re: Home equity as a percentage of net worth?
« Reply #96 on: May 30, 2015, 06:48:37 PM »
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

What Spork said.

Also,  perhaps many of us "double digit" folk have owned our houses quite a while by now.  June 15 will be 20 years in my primary residence. and we've owned our rentals for 13 years each.

Sure, and that means they've paid down some of their principal, and have appreciated.  On the other hand, it also means that the rest of your portfolio has had a decade and 1/2 to grow.  :)
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Re: Home equity as a percentage of net worth?
« Reply #97 on: May 30, 2015, 07:56:08 PM »
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

What Spork said.

Also,  perhaps many of us "double digit" folk have owned our houses quite a while by now.  June 15 will be 20 years in my primary residence. and we've owned our rentals for 13 years each.

Sure, and that means they've paid down some of their principal, and have appreciated.  On the other hand, it also means that the rest of your portfolio has had a decade and 1/2 to grow.  :)

In my case, it just means I got really lucky buying my house.

ender

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Re: Home equity as a percentage of net worth?
« Reply #98 on: May 30, 2015, 07:57:28 PM »
This is interesting to me, I was expecting a lot lower numbers. I'm surprised how many of you are well into the double digits.

We have about 5% of our NW now in "house downpayment savings" plans, with the hope do about double that by year-end.

Won't that also put you into double digits?


... depends on how the market does, I guess.

We're also doing other savings than just for a house, so it's likely our percentage will still be below 10% at the end of the year.

Doubling the actual amount, not the percentage of our net worth :)

Snow White

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Re: Home equity as a percentage of net worth?
« Reply #99 on: May 30, 2015, 08:22:16 PM »
13-14%. No mortgage.