What is Your Home Worth? Staying or Selling, It’s Important to Know
A professional valuation of your house is an estimate of how much your house would sell for if it were on the market. It is specific to the time the appraisal is made in as property values tend to fluctuate over time and the condition of the house changes as time passes. Regardless of whether you are selling your home or staying in it, it helps to know its true value.
- Selling – It is imperative to know the value of the home if you are about to sell it. The net proceed that you get after selling is the balance left once the loan balance and the selling cost from the selling price are deducted. Since you already know your loan balance and the selling cost, knowing the selling price is the first step if you want to sell it in the near future.
- Refinancing – Depending on the lending program, you may be allowed to borrow anywhere between 75 percent to 96.5 percent of your property’s worth. While there are other parameters that go into determining the credit, equity in the property is one of the most important criteria for underwriting. The more the equity, the better the loan terms. It also tells you the size of the mortgage you can take, be it for refinancing so that you can get a better rate, smaller payments, or use the funds for needs other than loan payment.
- Line of Credit – Getting a cash-out by refinancing your mortgage is not ideal if your interest rate is lower than that of the market. If you just want to borrow cash against your property, availing a second mortgage in the form of a Home Equity Line of Credit is a better idea. It also requires you to have some equity level in the property (a minimum of 20-25 percent). So, knowing the value of your home will give you a good idea of whether you qualify for the line of credit.
- Making Improvements to the Home – Home improvements are usually made to make the house more comfortable or to fetch a better resale value. If the price of your house is already towards the higher end of the neighborhood, then investing a lot of money on making improvements is not going to yield suitable returns. Therefore, it helps a lot to know the value of your home before you decide to make home improvements.
- Keep Yourself Informed – Even if you don’t have any immediate plans to get credit, make improvements or sell the house, it is best to keep abreast of the property value. Emergency situations or plans might arise in the future. Knowing the value lets you be ready for unexpected situations.