Checked the other day how much of my home loan I’ve paid off. It’s currently sitting at 8.13% gone, up from 6.59% this time last year, and it’s only shifting at about 0.11% per month (unless I choose to pay extra). Slow going. So much for my NY resolution in 2006 of trying to pay off 20% by the end of that year.
Some will say that buying a house doesn’t make economic sense; that renting is overall a better option. When I see the home loan statements, with the humongous amount of interest being charged, I can see that point of view.
But my sister pointed out the other day that it’s pointless looking at it like that. Money lost in interest is just part of the cost of having the house. I guess you could compare it to rent — in those terms, my loan payments are about double what I was paying in rent.
Wait a sec. If you took into account the full proposition, all the money going in, going out, and the how the property value is appreciating, how does it all add up?
So I did a few quick calculations. Thanks to the booming house prices in my area, I’m actually making a huge profit every month. In fact the expenses of loan payments and interest are outweighed 3:1 by the current (estimated) monthly appreciation on the house. Even if prices were rising half as fast, I’d still be ahead.
It’s worth noting that one of the criteria the Buyers Advocate used was that the house would be a good investment — along with all the other factors such as location and affordability and something I liked.
So while it’s money I’ll never see (I’m determined to avoid ever moving house again, cockroaches or no cockroaches), it’s certainly all piling up. That’s cheered me up no end.