Your Home Equity / Net Worth Ratio?

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Flashes1
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Re: Your Home Equity / Net Worth Ratio?

Postby Flashes1 » Thu Mar 14, 2013 1:14 pm

1. 25%

2. We've been paying about $1k extra month towards principle....mortgage will hopefully be paid off in 20 years when it's time for me to retire.

Zytos
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Re: Your Home Equity / Net Worth Ratio?

Postby Zytos » Thu Mar 14, 2013 1:50 pm

1. 37% (Long Island, NY)
2. No. Probably around 24-25 years to go.

ks289
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Re: Your Home Equity / Net Worth Ratio?

Postby ks289 » Thu Mar 14, 2013 2:24 pm

27% :?:

No :|

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ofcmetz
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Re: Your Home Equity / Net Worth Ratio?

Postby ofcmetz » Thu Mar 14, 2013 5:59 pm

1. 25%

2. No. Less than 12 years to go.
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Blister
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Re: Your Home Equity / Net Worth Ratio?

Postby Blister » Thu Mar 14, 2013 7:35 pm

17%

yes

22%
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rr2
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Re: Your Home Equity / Net Worth Ratio?

Postby rr2 » Thu Mar 14, 2013 7:45 pm

1. About 15%

2. No. Just refinanced last year to to 30 year fixed, but paying extra to be done in about 22 years.

kamo
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Re: Your Home Equity / Net Worth Ratio?

Postby kamo » Thu Mar 14, 2013 8:49 pm

1. 8.5%

2. No
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Dadarkar
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Re: Your Home Equity / Net Worth Ratio?

Postby Dadarkar » Thu Mar 14, 2013 8:58 pm

1. 26%
2. yes
3. 30%

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jeffyscott
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Re: Your Home Equity / Net Worth Ratio?

Postby jeffyscott » Thu Mar 14, 2013 9:12 pm

1. about 17%

2. Yes

3. about 40% (paid off about 9 years ago, home value is about the same now as it was then)
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harikaried
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Re: Your Home Equity / Net Worth Ratio?

Postby harikaried » Fri Mar 15, 2013 3:48 am

I'm somewhat confused with what this is trying to get at or learn. Is this looking at diversification of one's net worth, so one doesn't put too much of one's net worth into a single asset/home equity?

Grt2bOutdoors
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Re: Your Home Equity / Net Worth Ratio?

Postby Grt2bOutdoors » Fri Mar 15, 2013 8:41 am

harikaried wrote:I'm somewhat confused with what this is trying to get at or learn. Is this looking at diversification of one's net worth, so one doesn't put too much of one's net worth into a single asset/home equity?


I think the OP is trying to figure out just how much Bogleheads are worth. :confused
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acegolfer
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Re: Your Home Equity / Net Worth Ratio?

Postby acegolfer » Fri Mar 15, 2013 9:42 am

harikaried wrote:I'm somewhat confused with what this is trying to get at or learn. Is this looking at diversification of one's net worth, so one doesn't put too much of one's net worth into a single asset/home equity?


Right on.

There are many threads discussing whether to pay off mortgage or not. Most of the advice focused on the opportunity cost argument. But I believe asset allocation is something one should also consider. Wanted to get some empirical data from fellow bogleheads.

wesleymouch
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Re: Your Home Equity / Net Worth Ratio?

Postby wesleymouch » Fri Mar 15, 2013 9:44 am

8% for us. A house is just a big consumer good which you "rent" from the government via property taxes.

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G12
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Re: Your Home Equity / Net Worth Ratio?

Postby G12 » Fri Mar 15, 2013 10:42 am

1) 11%
2) Yes, although it was a home equity line at the time
3) too similar to make a difference

harikaried
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Re: Your Home Equity / Net Worth Ratio?

Postby harikaried » Fri Mar 15, 2013 11:39 am

acegolfer wrote:There are many threads discussing whether to pay off mortgage or not.
Okay, originally I had an example in my previous comment:

If someone had $100k cash and decided to buy a $100k house with a $80k loan, equity = $20k, net worth = $100k, ratio = 20%. But then if one pays off that loan immediately, equity = $100k, net worth = $100k, ratio = 100%, i.e., shifting all assets into home equity.

Doing a quick glance at the responses, it seems like people feel comfortable with 20-30% net worth being home equity when paying off a mortgage. So perhaps when making extra principal payments, be aggressive in lowering the debt but not so much that you shift too much of your assets into the home.

acegolfer
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Re: Your Home Equity / Net Worth Ratio?

Postby acegolfer » Fri Mar 15, 2013 1:31 pm

harikaried wrote:
acegolfer wrote:There are many threads discussing whether to pay off mortgage or not.
Okay, originally I had an example in my previous comment:

If someone had $100k cash and decided to buy a $100k house with a $80k loan, equity = $20k, net worth = $100k, ratio = 20%. But then if one pays off that loan immediately, equity = $100k, net worth = $100k, ratio = 100%, i.e., shifting all assets into home equity.

Doing a quick glance at the responses, it seems like people feel comfortable with 20-30% net worth being home equity when paying off a mortgage. So perhaps when making extra principal payments, be aggressive in lowering the debt but not so much that you shift too much of your assets into the home.


Exactly.

I was surprised to see the 20-30% ratio when other BH paid off their mortgage. My initial guess would have been around 40%. It seems that BH really like to invest a lot of their net worth in financial assets. Great stuff!

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Peter Foley
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Re: Your Home Equity / Net Worth Ratio?

Postby Peter Foley » Fri Mar 15, 2013 2:21 pm

acegolfer

So are you planning to do any analysis based on the responses? In scanning the responses I was unable to gain any insight into what such a ratio might mean; too many other variables and a host of unknowns.

acegolfer
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Re: Your Home Equity / Net Worth Ratio?

Postby acegolfer » Fri Mar 15, 2013 2:39 pm

Peter Foley wrote:acegolfer

So are you planning to do any analysis based on the responses? In scanning the responses I was unable to gain any insight into what such a ratio might mean; too many other variables and a host of unknowns.


I agree. To be able to do any analysis, I will need more personal information such as age, actual $ net worth. I just asked questions that are not too intrusive. I bet some may think even the OP questions are too personal.

From the responses, I can say

1. BHs don't put all the net worth in one asset.
2. Many BHs have paid off mortgage.

What else have you found?

DrPeppaPig
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Re: Your Home Equity / Net Worth Ratio?

Postby DrPeppaPig » Fri Mar 15, 2013 2:43 pm

1 - 20%
2 - No

icefr
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Re: Your Home Equity / Net Worth Ratio?

Postby icefr » Fri Mar 15, 2013 3:05 pm

1. 46%
2. Not yet, but should do so within 5-6 years.
3. I expect it to go up to about 55% by the time I pay it off.

savetoinvest
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Re: Your Home Equity / Net Worth Ratio?

Postby savetoinvest » Fri Jun 05, 2015 10:17 pm

acegolfer wrote:
harikaried wrote:I'm somewhat confused with what this is trying to get at or learn. Is this looking at diversification of one's net worth, so one doesn't put too much of one's net worth into a single asset/home equity?


Right on.

There are many threads discussing whether to pay off mortgage or not. Most of the advice focused on the opportunity cost argument. But I believe asset allocation is something one should also consider. Wanted to get some empirical data from fellow bogleheads.


Fully support the idea of asset allocation argument. Unfortunately you are not asking the target allocation along with how much portfolio is in low-risk/fixed income.

Playing along..
1. 30%
2. no.

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Uncle Pennybags
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Re: Your Home Equity / Net Worth Ratio?

Postby Uncle Pennybags » Fri Jun 05, 2015 10:56 pm

1. 36%

2. Yes

3. 100%

Paid off 6 years ago. I had a negative net worth at that time.

Edit from 57% to 36%, I forgot to add in the value of my home to the denominator. :oops:
Last edited by Uncle Pennybags on Fri Jun 05, 2015 11:31 pm, edited 1 time in total.

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wander
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Re: Your Home Equity / Net Worth Ratio?

Postby wander » Fri Jun 05, 2015 11:02 pm

1. Less than 10%
2. Yes
3. Less than 20%.

Carefreeap
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Re: Your Home Equity / Net Worth Ratio?

Postby Carefreeap » Fri Jun 05, 2015 11:23 pm

Today about 20%. Maybe higher if you actually believe today's values. Yes, I believe a correction is coming very soon.

Yes house is paid off.

At the time we paid off the mortgage (2010) it was probably around 25%.

The interesting thing to note here is how the values changed from 2010 to 2015; almost 50%.

snackdog
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Re: Your Home Equity / Net Worth Ratio?

Postby snackdog » Sat Jun 06, 2015 6:00 am

Most people will start with zero home equity and possibly negative net worth. Then they will save and put a down payment giving them equity, but still possibly negative net worth. As they save and build equity it will rise from 0% to some maximum, maybe worst case 50%. Then, they will save and savings will overtake equity. Eventually equity will fall to 5-15% of net worth. If you spend all your cash, your home equity might be 100% of your net worth. Then you take a home equity loan and start spending. Equity falls to 10% of net worth as you spend it all up on nursing home costs.

So what?

SQRT
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Re: Your Home Equity / Net Worth Ratio?

Postby SQRT » Sat Jun 06, 2015 6:30 am

About 20%

No mortgages, repaid before we retired.

This has been an issue for us as we bought 2 "vacation type" properties after retirement and were concerned about having too much RE. The ratio of RE to total assets will be constrained by the availability of cash flow to maintain such properties. I think something around 20-25% might be maximum comfortable equilibrium in retirement if you value all sources of cash flow, eg pensions and SS.

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xystici
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Re: Your Home Equity / Net Worth Ratio?

Postby xystici » Sat Jun 06, 2015 7:05 am

1. 28.6% as of today
2. yes
3. 66.4% as of Feb. 2009

Qprkid
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Re: Your Home Equity / Net Worth Ratio?

Postby Qprkid » Sat Jun 06, 2015 7:14 am

1) 49%, two homes
2) Yes on Primary(last year), No on Secondary
3) Estimating 55%

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Hawaiishrimp
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Re: Your Home Equity / Net Worth Ratio?

Postby Hawaiishrimp » Sat Jun 06, 2015 9:42 am

1) 26%

2) No
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DFrank
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Re: Your Home Equity / Net Worth Ratio?

Postby DFrank » Sat Jun 06, 2015 10:07 am

1. 22%

2. See below.

3. 23%

We own two homes, our current residence, and our retirement home. Figures above represent the equity in both homes. There is no mortgage on the retirement home, and equity in our current residence will become retirement savings in about a year when we retire. We just about had our current home paid for when we bought the second home, and refinanced it to buy the second home.
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Netherworld
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Re: Your Home Equity / Net Worth Ratio?

Postby Netherworld » Sat Jun 06, 2015 10:11 am

20%
Yes (20140
20%

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JDCarpenter
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Re: Your Home Equity / Net Worth Ratio?

Postby JDCarpenter » Sat Jun 06, 2015 11:58 am

1. 7%

2. No. (3.25% interest rate; if paid off, house = 12% of N.W.)
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vitaflo
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Re: Your Home Equity / Net Worth Ratio?

Postby vitaflo » Sat Jun 06, 2015 12:19 pm

11%
no

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mickeyd
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Re: Your Home Equity / Net Worth Ratio?

Postby mickeyd » Sat Jun 06, 2015 2:00 pm

1. <10%
2. yes
3. SWAG 25%
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Gronnie
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Re: Your Home Equity / Net Worth Ratio?

Postby Gronnie » Sat Jun 06, 2015 2:52 pm

1. Infinite (home equity - student loan balance = negative number)
2. No - 11+ years to go on 15 year fixed mortgage at 2.75%

SunnySeattle
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Re: Your Home Equity / Net Worth Ratio?

Postby SunnySeattle » Sun Jun 07, 2015 1:29 am

35%
Yes
40%

renue74
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Re: Your Home Equity / Net Worth Ratio?

Postby renue74 » Sun Jun 07, 2015 2:37 am

1. 7%

2. No

We bought our home in 2002 near Charlotte, NC. Housing bubble wasn't as big as other places, plus I sold a mobile app business recently that increased our net worth by 5x.

We'll pay off our home in the next 5 years...by the time I'm 46. The master bedroom is not on the main floor, so I assume this won't be our last home, but I'm definitely not in the market to buy right now. #sellersmarket

2comma
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Re: Your Home Equity / Net Worth Ratio?

Postby 2comma » Sun Jun 07, 2015 4:29 am

10%
Yes
12%
If I am stupid I will pay.

Ignatious P. Daily
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Re: Your Home Equity / Net Worth Ratio?

Postby Ignatious P. Daily » Sun Jun 07, 2015 6:13 am

1: 60%

2: Yes

3: 66%

We bought our home for cash 6-months ago. I struggled with the decision to pay cash. I can say that I don't regret it for a second. It has been very liberating. I am turning 36 and my wife is 34. We now have free cash flow of ~$8k - $14k per month that we can redirect. We have some furniture to purchase near term and a fence to build (on a lake with small child), but after that we have no large planned expenses until the next car refresh (in like 7 years). We are planning for $1m in investments by age 40 and $2m by age 45 - after which I will likely leave corporate america, accept the cut to savings rate, and simply find low stress work to liability match from work income.

You cannot break down these decisions only by the numbers. I expected a stress and emotional benefit from buying cash, but I WAY underestimated their impact. From a quality of life perspective it was one of the best decisions we ever made.

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obgyn65
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Re: Your Home Equity / Net Worth Ratio?

Postby obgyn65 » Sun Jun 07, 2015 6:24 am

1. Less than 5%
2. I paid my home cash.
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German Expat
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Re: Your Home Equity / Net Worth Ratio?

Postby German Expat » Sun Jun 07, 2015 6:51 am

Used to have 2 properties, sold the house last year, the Condo is now under contract. We did move to Switzerland.

Used to be 25% before we moved, then went down to 8%.

So the answers are now:

1. 0%
2. no

At my peak home equity (when buying the first house in Germany) many years ago the answer to 1. would have been 80%.

ubermax
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Re: Your Home Equity / Net Worth Ratio?

Postby ubermax » Sun Jun 07, 2015 12:55 pm

1. 3% ( use to be closer to 4% before condo prices declined in our area ; but it'll always be a guess until we sell it :happy )
2. No

Matt62
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Re: Your Home Equity / Net Worth Ratio?

Postby Matt62 » Sun Jun 07, 2015 1:49 pm

1. 40%
2. Yes
3. 40%

aj44
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Re: Your Home Equity / Net Worth Ratio?

Postby aj44 » Sun Jun 07, 2015 2:04 pm

1. 15%

2. Yes

3. 24%

hadron
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Re: Your Home Equity / Net Worth Ratio?

Postby hadron » Sun Jun 07, 2015 2:22 pm

1. 25%
2. No

jucor
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Re: Your Home Equity / Net Worth Ratio?

Postby jucor » Sun Jun 07, 2015 4:01 pm

1. 15%
2. Yes
3. 18%

MrNewEngland
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Re: Your Home Equity / Net Worth Ratio?

Postby MrNewEngland » Mon Jun 08, 2015 8:22 am

Very nice to see that no one is in the negative with their houses anymore. I wonder how different these numbers would look if it was asked in 2009.

KlangFool
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Re: Your Home Equity / Net Worth Ratio?

Postby KlangFool » Mon Jun 08, 2015 8:32 am

OP,

1) 9%

2) No.

KlangFool

KlangFool
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Re: Your Home Equity / Net Worth Ratio?

Postby KlangFool » Mon Jun 08, 2015 8:40 am

snackdog wrote:Most people will start with zero home equity and possibly negative net worth. Then they will save and put a down payment giving them equity, but still possibly negative net worth. As they save and build equity it will rise from 0% to some maximum, maybe worst case 50%. Then, they will save and savings will overtake equity. Eventually equity will fall to 5-15% of net worth. If you spend all your cash, your home equity might be 100% of your net worth. Then you take a home equity loan and start spending. Equity falls to 10% of net worth as you spend it all up on nursing home costs.

So what?


snackdog,

1) Most people are not Boglehead.

2) For example, I do not take this path at all.

A)I do not count the house as part of my net worth

B) I only buy house that is 1/3 to 1/4 of my total asset (not counting the house). If there is no house in that price range, I rent. And, I live in a HCOL area.

C) In my case, if I count the house as part of net worth, it will never exceed 25% even if I paid it off.

3) I never had negative net worth. When I graduated from college, I had 8K of savings.

You do not have to agree with me. But, not everyone follow the same path.

KlangFool

wxz76
Posts: 46
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Re: Your Home Equity / Net Worth Ratio?

Postby wxz76 » Mon Jun 08, 2015 8:44 am

1. 40%
2. Yes
3. 45%


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