Mortgage Entries and Equity Buildup


When making the entry for the monthly payment, is the figure to be supplied there principal and interest only? I am thinking it is since taxes and insurance are accounted for elsewhere.

Secondly, I am a bit confused by the rapid buildup in homeowner equity shown by the program. Certainly principal pay down is accounted for in there and real appreciation also (luckily positive in my area) but the figures seem to be in excess of what I would expect. Anyone know what input error is common or a variable I am not thinking of that would account for this? I assume the numbers in the spreadsheets are not nominal but inflation adjusted.


dan royer's picture

Yes, taxes and insurance entered on the left in that panel and mortgage only as you suspected for monthly payment (not including taxes and insurances).

Note that the program asks for "real appreciation" rate on the home--that is, above inflation. So inflation set at 3% and you indicate a "real appreciation" rate of 2% then you are saying the home increases in value at 5% in nominal terms. If inflation is 3% and you indicate that the home increases 0% real, then you should see the home equity rise during the payoff years then hold steady in 2015 dollars for the remainder.

The numbers are all reported in 2015 dollars (current year dollars) so in the Housing Report in the mortgage column you should see those numbers going down each year since you have a fixed rate mortgage and you are paying off with "cheaper" dollars each year.

Thanks, Dan. It was the payoff in "cheaper dollars" that was mentally unaccounted for by me.

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