The increase in property values across the country has been a setback for those looking to buy their first home. But if you already own a home, you can benefit from these increases with a boost in your home's value to help you refinance your mortgage or borrow against some of its equity.
However, to take advantage of your home's equity growth, you will need to hire a professional appraisal on your home to evaluate its value based on many different factors, including its condition and appearance. Here are some recommendations to help your upcoming home appraisal go more smoothly and to be better prepared for the process.
Evaluate Your Home's Position
To help you get a good idea of your home's current equity position, you can complete your own basic evaluation. This will help you understand the general value of what your home's equity is and if you are going to benefit from a refinance and avoid paying private mortgage insurance (PMI). You can use a general guideline with private mortgage insurance to evaluate if you will be paying it on your refinanced mortgage; keep at least twenty percent of its equity to avoid paying a PMI to your lender, which can add extra to your mortgage payment. For example, if your home's value is appraised at $200,000, your mortgage needs to be less than $160,000 to avoid PMI.
Look at homes in your area to see what similar homes are selling for. Your real estate agent can help you by pulling up comparable home sales in the area. You can look at homes that are very similar to your home in size, age, and style to evaluate their sales price. This will help establish your home's value and can be used to calculate what your home's loan-to-value ratio is.
Prepare Your Home's Condition
A home appraiser is going to look at your home's size along with the number of rooms, bedrooms, and bathrooms, and systems inside the home, but they are also going to look at the condition to establish a home equity value. For this reason, it is recommended to complete any small repairs and work that your home needs.
These are usually projects that you put off to do some weekend, but they were never completed, such as painting over wall repair patches or installing outlet covers after painting. If you need to replace your old and leaky dishwasher with a new one, now is the time to do this. Having new appliances that work well is going to help your home's appraisal value.
The overall condition of your home and how well it has been kept up is going to be a factor your appraiser is going to look at. This provides them with information on whether your home has been maintained or neglected. So, take some time and catch up on your to-do list of home repairs prior to the appraisal.
For more information, contact a real estate appraiser.
Welcome to my website. My name is Larry Silva, and I want to talk a bit about private mortgage insurance. You may have heard the term PMI mentioned when you were in the process of purchasing real estate. When I first heard my lender talking about PMI, I was very confused. It was my realtor who sat me down and explained what private mortgage insurance was and when someone is required to purchase it. He told me that PMI is not lifelong insurance; it can be cancelled when the mortgage principal balance reaches a certain point. Once it was explained to me, private mortgage insurance was no longer a mystery or a confusing concept. I would like to pass on what I learned and hope that you find it to be of value.