Knowing the value of your home will help put you in control of your home ownership decisions. A property’s value is a snapshot in time based on current market activity and is an opinion of what the property might sell for at that particular time. A change in the local housing market might improve or decline thus affecting your homes value.
Selling :
If you are considering selling, you absolutely need to know the value of your home. The net proceeds you make after selling a house is your selling price minus the loan balance minus the selling cost. Most likely you already know your loan balance and the selling cost prevailing in your area. The only variable being the selling price. Getting a better idea about your home value is definitely a good first step if you are considering selling in the near future. Your Realtor will be able to help you gather the most up to date market reports and their knowledge and expertise in analyzing the data will ensure you determine an accurate list price that will position your home to sell quickly and for top dollar. Too often sellers make the mistake of not listening to the advice of their Realtor. Listing too high for the current market results in longer market time and inevitably sellers find them selves chasing the market with price reductions. The end result can be a sale price below what could have been fetched had the home been priced correctly at the start of the selling process. Getting updates on your home's value now before you even consider selling can help you avoid the above mentioned pitfalls.
Making Home Improvements:
Home improvements are primarily made for two reasons – making the house more comfortable to live in or preparing the house for sale to fetch a better selling price. If your home is already priced at the higher end in a neighborhood, making home improvements may not yield a suitable return on investment. For example, if you live in a neighborhood where the highest priced homes are in the $400,000 range and your house is already worth $375,000; even after investing $50,000 in upgrades it may not sell for more than $400,000. So all the money and time invested could be a waste. Understanding your home value and that of the neighborhood you live in should be the first step before you decide on making expensive home improvements.
Refinancing:
Depending on the loan program, lenders may allow you to borrow a maximum of 75% against your property. While you need to qualify on other credit parameters, equity in the house is one of the more important underwriting criteria. Up to a certain point, the more equity you have the better loan terms you may qualify for. Also, knowing your home value tells you how big a mortgage you can take – whether its refinancing to get a better rate, lower payment or taking a cash-out to satisfy other needs. Knowing the current real estate market and the direction it is going is an important first step when considering any type of loan against the equity in your home.
Getting a Line of Credit:
Sometimes refinancing your mortgage to get a cash-out may not be the ideal move if you have an interest rate lower than the market. In that case, if you want to borrow cash against your house, getting a Home Equity Line of Credit (HELOC) as a 2nd mortgage is a much better idea. But, just like a refinance loan, HELOCs also require that you have a certain equity level in your house, typically a minimum of 20%-25%. Once again, knowing your home value will guide you if getting a HELOC is something you could qualify for.
Knowing your home value is something you should be informed of over the course of ownership and not just something to think about when it is time to sell. Contact us today to receive a comprehensive market analysis as it relates to your home specifically. We will sit down with you to help you understand where the data is coming from and how it is analyzed and most importantly how it relates to your ownership decisions.
Contact us and we will supply you with some simple questions that can get us started on helping you determine your homes market value.
Ciara Crews
BIG RED REALTY GROUP | 773-520-2571 | ciara@bigredre.com