How much house do I actually own?

By Josh July 10, 2018

Hey reader! Overall, my home ownership story has been a truly awful experience that I wouldn’t wish upon anyone… but these days, I am finally seeing some light at the end of the tunnel.

Front door of Josh's house
My first house

Quick recap: Bought a 1,180 square foot townhouse in Southwest Florida in April 2006, for $175,000. My mortgage is through a credit union, and they only required a 3% down-payment for First Time home-buyers like me. That sounds like a good way to get people into their own homes for the first time, but very few people predicted what happened to the housing market. This was especially true in my area, which led the nation in foreclosures for years after the bubble burst.

Long story short, my home dropped in value by well over 50%. According to my assessed values, my house dropped from somewhere in the 100s down to a low of 27,430. While that was good for my tax bill (see below for past 10 years of property tax bills), I worked for local government at that time, and when local government isn’t collecting as much money in taxes, they make staffing cuts, and I quickly found myself with an underwater mortgage AND no job.

Property Tax history 2008-2017

So where am I now? A couple months ago, I passed the 12-year mark since I bought my first home. The recovery from the great recession has been slow, especially since Real Estate Rule #1 “Location, Location, Location” hurt me when the golf course that my property is located within went kaput! If you clicked the link above about foreclosures, you will see my neighborhood at the 1:15 mark. There are plans being considered by the County to permit a luxury development and revamp of the golf course, which should make my property worth considerably more in the next few years, but for the purposes of this post, I will stick with current Zillow value: $126,519

Twelve years of paying mortgage payments, and my house is worth $48,481 less than when I bought it. But I also had the good fortune to know about a grant program for distressed homeowners, such as myself a few years back, and I was awarded $50,000 towards my mortgage principal, which effectively makes my net purchase price $125,000. That 50k grant was actually a 5-year forgiveable loan, in $10k increments, so at the time of this writing, I actually still “owe” $10k on that grant, should I sell and walk away anytime between now and February 2019. For that reason, I will consider my purchase price $135,000 ($175k – 4x $10k)

Doing this math, I have zero equity. I am $8,481 in the hole.

Counting all of the mortgage payments I’ve made over 12 years, I currently owe $80,376 on the mortgage. Subtracting this from the Zillow value, I own $46,143 worth of house. Based on its current Zillow value, I own 36.5% of my house. That’s 430.7 square feet, or the approximate size of my master bedroom, living room and the half-bath downstairs. But I don’t yet own my master bathroom, nor the stairs to get up to my bedroom and guest bathroom. The kitchen, laundry room and dining room still belong to the credit union, too!

$48,481 isn’t a lot of progress in 12 years. Just over $4,000 per year or a little more than $336 per month.

I’m not really a proponent of paying off the mortgage early, if you have a low fixed-rate mortgage or an adjustable rate mortgage (like me) that is still sitting on the floor of the possible rates I could be charged. I’m glad my adjustable rate was low during the high balance years, so now I’m better able to withstand a rate increase without hurting my bottom line too much. If my rate goes up beyond 5%, I’ll start paying down my balance with more gusto, and above 6% I’ll discontinue putting money into my taxable brokerage to kill off the debt beast. Fortunately, my mortgage balance is now down to around $80k, so any interest rate increases won’t hurt me as badly as someone carrying hundreds of thousands of adjustable rate mortgage debt.

7 thoughts on “How much house do I actually own?”

  1. Ouch. Not even getting back to zero now is pretty painful, but by sticking it out this long at least you won’t be in the hole long term. Conservatively, we own about 57% of our house if you put it that way, but the market has been very kind to us.

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    1. I’m down almost 28% from my original purchase price, and I’ve put thousands more into it to fix up/improve the property. I’ll just be happy if/when I can get out without owing at the closing table. That’s when I’ll be free from the burden that my house/mortgage has become these past 12 years.

      Liked by 1 person

  2. I saw that price you paid for the townhome, and thought this was going to be a blog post about a great deal! I’m so sorry you bought in the height of the market. 😦 we bought our place two years ago, and my biggest fear is it’ll drop in value. I wasn’t really aware of housing values until I become a homeowner, so I am SHOCKED at how much value they lost during the crash.
    You’re doing awesome getting ahead though!

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    1. I know $175k sounds like a steal in most markets, and it’s definitely a good percentage below the median in my area, despite being in a golf course community. Just shows that any price point can be affected by a real estate downturn. I certainly can’t complain about my mortgage payments (including taxes and insurance) being less than $700/month.

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