Your Home Equity / Net Worth Ratio?
Re: Your Home Equity / Net Worth Ratio?
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.
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.
Re: Your Home Equity / Net Worth Ratio?
1. 37% (Long Island, NY)
2. No. Probably around 24-25 years to go.
2. No. Probably around 24-25 years to go.
Re: Your Home Equity / Net Worth Ratio?
1. 25%
2. No. Less than 12 years to go.
2. No. Less than 12 years to go.
Never underestimate the power of the force of low cost index funds.
Re: Your Home Equity / Net Worth Ratio?
17%
yes
22%
yes
22%
Everthing works out in the end. If it doesn't then its not the end.
Re: Your Home Equity / Net Worth Ratio?
1. About 15%
2. No. Just refinanced last year to to 30 year fixed, but paying extra to be done in about 22 years.
2. No. Just refinanced last year to to 30 year fixed, but paying extra to be done in about 22 years.
Re: Your Home Equity / Net Worth Ratio?
1. 26%
2. yes
3. 30%
2. yes
3. 30%
- jeffyscott
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Re: Your Home Equity / Net Worth Ratio?
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)
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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Re: Your Home Equity / Net Worth Ratio?
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?
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- Location: New York
Re: Your Home Equity / Net Worth Ratio?
I think the OP is trying to figure out just how much Bogleheads are worth.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?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Your Home Equity / Net Worth Ratio?
Right on.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?
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.
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Re: Your Home Equity / Net Worth Ratio?
8% for us. A house is just a big consumer good which you "rent" from the government via property taxes.
Re: Your Home Equity / Net Worth Ratio?
1) 11%
2) Yes, although it was a home equity line at the time
3) too similar to make a difference
2) Yes, although it was a home equity line at the time
3) too similar to make a difference
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Re: Your Home Equity / Net Worth Ratio?
Okay, originally I had an example in my previous comment:acegolfer wrote:There are many threads discussing whether to pay off mortgage or not.
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.
Re: Your Home Equity / Net Worth Ratio?
Exactly.harikaried wrote:Okay, originally I had an example in my previous comment:acegolfer wrote:There are many threads discussing whether to pay off mortgage or not.
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.
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!
- Peter Foley
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Re: Your Home Equity / Net Worth Ratio?
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.
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.
Re: Your Home Equity / Net Worth Ratio?
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.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.
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?
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Re: Your Home Equity / Net Worth Ratio?
1 - 20%
2 - No
2 - No
Re: Your Home Equity / Net Worth Ratio?
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.
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.
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Re: Your Home Equity / Net Worth Ratio?
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.acegolfer wrote:Right on.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?
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.
Playing along..
1. 30%
2. no.
- Uncle Pennybags
- Posts: 1835
- Joined: Tue Oct 28, 2014 2:05 am
Re: Your Home Equity / Net Worth Ratio?
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.
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.
Last edited by Uncle Pennybags on Fri Jun 05, 2015 11:31 pm, edited 1 time in total.
Re: Your Home Equity / Net Worth Ratio?
1. Less than 10%
2. Yes
3. Less than 20%.
2. Yes
3. Less than 20%.
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Re: Your Home Equity / Net Worth Ratio?
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%.
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%.
Every day I can hike is a good day.
Re: Your Home Equity / Net Worth Ratio?
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?
So what?
BH Consumer FAQ: |
Car? Used Toyota, Lexus or Miata. |
House? 20% down and 3x salary. |
Vacation house? No. |
Umbrella? $1 million. |
Goods? Costco.
Re: Your Home Equity / Net Worth Ratio?
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.
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.
Re: Your Home Equity / Net Worth Ratio?
1. 28.6% as of today
2. yes
3. 66.4% as of Feb. 2009
2. yes
3. 66.4% as of Feb. 2009
Trust yourself, Break the rules, Don't be afraid to fail, Don't listen to naysayers, Work your butt off. "It is in your moments of decision that your destiny is shaped. Choose now and well"
Re: Your Home Equity / Net Worth Ratio?
1) 49%, two homes
2) Yes on Primary(last year), No on Secondary
3) Estimating 55%
2) Yes on Primary(last year), No on Secondary
3) Estimating 55%
- Hawaiishrimp
- Posts: 501
- Joined: Tue Apr 14, 2015 4:13 am
Re: Your Home Equity / Net Worth Ratio?
1) 26%
2) No
2) No
I save and invest my money, so money can make money for me, so I don't have to make money eventually.
Re: Your Home Equity / Net Worth Ratio?
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.
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.
Dave
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Re: Your Home Equity / Net Worth Ratio?
20%
Yes (20140
20%
Yes (20140
20%
- JDCarpenter
- Posts: 1800
- Joined: Tue Sep 09, 2014 2:42 pm
Re: Your Home Equity / Net Worth Ratio?
1. 7%
2. No. (3.25% interest rate; if paid off, house = 12% of N.W.)
2. No. (3.25% interest rate; if paid off, house = 12% of N.W.)
Our personal blog (no ads) of why we saved/invested: https://www.lisajtravels.com/
Re: Your Home Equity / Net Worth Ratio?
1. <10%
2. yes
3. SWAG 25%
2. yes
3. SWAG 25%
Part-Owner of Texas |
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“The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
Re: Your Home Equity / Net Worth Ratio?
1. Infinite (home equity - student loan balance = negative number)
2. No - 11+ years to go on 15 year fixed mortgage at 2.75%
2. No - 11+ years to go on 15 year fixed mortgage at 2.75%
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Re: Your Home Equity / Net Worth Ratio?
edited
Last edited by SunnySeattle on Fri Jan 06, 2017 10:45 pm, edited 1 time in total.
Re: Your Home Equity / Net Worth Ratio?
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
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
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- Joined: Thu Oct 09, 2014 3:11 pm
Re: Your Home Equity / Net Worth Ratio?
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.
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.
Re: Your Home Equity / Net Worth Ratio?
1. Less than 5%
2. I paid my home cash.
2. I paid my home cash.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell
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Re: Your Home Equity / Net Worth Ratio?
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%.
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%.
Re: Your Home Equity / Net Worth Ratio?
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 )
2. No
2. No
Re: Your Home Equity / Net Worth Ratio?
1. 40%
2. Yes
3. 40%
2. Yes
3. 40%
Re: Your Home Equity / Net Worth Ratio?
1. 15%
2. Yes
3. 24%
2. Yes
3. 24%
Re: Your Home Equity / Net Worth Ratio?
1. 25%
2. No
2. No
Re: Your Home Equity / Net Worth Ratio?
1. 15%
2. Yes
3. 18%
2. Yes
3. 18%
-
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Re: Your Home Equity / Net Worth Ratio?
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.
Re: Your Home Equity / Net Worth Ratio?
OP,
1) 9%
2) No.
KlangFool
1) 9%
2) No.
KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
Re: Your Home Equity / Net Worth Ratio?
snackdog,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?
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
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
Re: Your Home Equity / Net Worth Ratio?
1. 40%
2. Yes
3. 45%
2. Yes
3. 45%