Motgage debt in

[zaphodX]

When I am doing my net worth calculation, should I include the complete outstanding debt on my house as a debt (currently at 200,000 for payoff), or should I only consider the portion where I plan to live in this house (1700 per month * 12 months x 3 more years = ~61,000).

Thanks in advance.

[NJDebbie]

In my opinion you should include the entire $200K when calculating your debt.

[zaphodX]

In my opinion you should include the entire $200K when calculating your debt.

Thanks for your reply. My bad that I should have posted my original concern when asking this question.

My concern is that I might move into a larger home after 3 years, in which case, I may be taking on more debt. So, for my retirement calculations, I want to factor in the increased home mortgage debt. Currently, I am not sure how much the additional monthly cost is going to be, so am finding it hard to come with a good way to calculate this expected change.

How should I factor in this future expected change in my future calculations?

[jpg7n16]

When I am doing my net worth calculation, should I include the complete outstanding debt on my house as a debt (currently at 200,000 for payoff), or should I only consider the portion where I plan to live in this house (1700 per month * 12 months x 3 more years = ~61,000).

Thanks in advance.

You include the entire amount of the liability - aka the full mortgage payoff amount.

The best way to think of assets is, "what could I sell it for in today's market?"
And to think of liabilities as "how much would it take to pay the full thing off today?"

When you sell the home you will pay off the full balance of the loan at that point - not just 3 years of payments.

So, say you sold your home for $225k today. You would only get to keep $25k of it, because it sold for $225k, of which you owed $200k to the bank.


It makes absolutely no sense to include the full $225k as an asset, but only $61k of the debt. That's not even a liability, $61k is just the cashflow requirement over the next 3 years.

I have no idea why you'd only include 3 years of payments. You owe the whole thing, not 3 years worth.

[jpg7n16]

My concern is that I might move into a larger home after 3 years, in which case, I may be taking on more debt. So, for my retirement calculations, I want to factor in the increased home mortgage debt. Currently, I am not sure how much the additional monthly cost is going to be, so am finding it hard to come with a good way to calculate this expected change.

How should I factor in this future expected change in my future calculations?

You would take the new value of the new home, and subtract the new debt balance.


If you move to a new $300k home and borrow $250k against it (easy math), your new net worth would include:

Assets - Liabilities = Net Worth
$300k - $250k = $50k

Include $50k from the new home in your net worth calculation at that point.


I think you have some misunderstanding around net worth. It's a straightforward calculation of: what you own minus what you owe.

Add up all your assets (current market value)
Subtract out all your debts (the full balances owed)
The rest is your equity.

Assets - Liabilities = Net Worth (Equity)

[actonwilliams]

Agreed. Moreover you can use free mortgage calculator to find out how your payments dream home will look like. These tools are free online and you can search it on Internet. Hope this will works for you.

With Regards
Acton Williams