The homeowner’s “garden”: a little equity grows


Have you ever bought a home? Well, if you only have a single full time job, and want another one on top of it, well, this is the plan for you.

Everything in this process seems to have resulted in the need for another person to come on board. It’s been like an endless human fugue, where after every voicing of the original theme, another voice comes in to do something in counterpoint.

And all the while, there’s me, the unwitting conductor, ostensibly keeping the time but really just a passive participant.

Enough with the strange analogies

Well, this process is rapidly coming to a close. And while nothing is definite (for all I know, this whole thing could fall through, and I’ll have a whole new perspective on the importance and urgency of finding shelter) I’ve been assured by all the voices in the fugue that things are moving along.

I remain a little ambivalent about the process. I still don’t know if this is a sensible move, or if I’ve just bought into a “big lie” that home ownership is a sound investment.

But as long as I’m committing to this process (at least for now), I might as well focus on the one part that I’m not really all that ambivalent about, namely the building of equity.

See, I like investing, because I want to increase the chances that I will be financially secure down the road. But no matter what index fund I choose, I can’t live in it.

But the advantage of home ownership (for those who can afford it) is that it is an investment I can live in. Or more accurately, it’s a savings account that I can live in.

And I just recently saw the real numbers, the final tally on how my equity/savings account will grow, once I move into this place.

Equity added each month

I’m taking out a 25 year mortgage. (I wanted to do a 20, but fear kept me from doing that.) While it feels a little surreal and spooky to be taking on debt, this is a long-term play.

I finally got to see my schedule of payments: what goes to interest and what goes to principal. This was very exciting to a numbers nerd such as myself.

So at the onset, the amount I will be paying toward principal each month, assuming I pay nothing extra, is: $300.

Every month, $300 goes into the equity pile. To me, it feels not unlike how a gardener must feel, putting some seed in the ground, and not seeing the reward for a long time. But slowly, over time, the reward happens.

And this number will increase over time as well, as the amount going toward interest will be reduced as well, accelerating the process. (And boy can that not happen soon enough.)

But part of me looks at this figure with a certain level of dissatisfaction. Only $300? Really? After all this?

That little?

I’ve figured out that I’ll be paying $600 more a month after the move. Even if you assume that I would have been spending $300 more while renting, that’s still not a lot of gain each month. I could have rented and put $300 in a cookie jar, right?

Potentially, assuming all else were equal. But my consolation prize, if nothing else, is that I’m significantly less likely to have to move unexpectedly (and unwillingly).

This whole process has shown that there really isn’t an obvious best choice moving forward. Sometimes you just have to pick an outcome and go with it.

But in the meantime, my little garden is going to slowly grow. No cockle shells required.

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