7 Reasons To Know Your Home Value

What exactly is your home worth today, and is it worth more than you paid for it?  Most homeowners do nothing with that information.

If homeowners don’t do anything with that information, they might be missing out. Knowing your home’s value empowers you to make important decisions, not only about your home, but about your life. Check out some of the reasons you should check up on your home’s value:

 1. See if you can ditch private mortgage insurance and save money

If you paid less than 20% downpayment when you bought your house and used a conventional loan, the lender probably required you to purchase private mortgage insurance (PMI). PMI protects the lender if you default on your mortgage and the home goes into foreclosure..

PMI usually costs about .5%-1% of the loan amount annually. For example, on a $200,000 mortgage, your PMI would be about $1,000 to $2,000 per year. The cost is typically split up and added to your monthly mortgage payment, along with the principal, interest, and property taxes.

2. Know if your property’s full value is really covered by homeowners insurance

Homeowners insurance (also known as home insurance) is required by most lenders to cover damage to the interior and exterior due to fire, lightning, vandalism, or other covered disasters. Your policy may also cover the contents of your home – including furnishings and clothing – as well as additional living expenses you must incur while your home is being repaired or rebuilt.

If you discover your home’s value has significantly increased, it might be time to reevaluate your homeowners insurance policy.. Your insurance coverage should match your home’s value; if the value has increased, your policy may lag behind. That could mean you’re not covered for the cost of its full value if something happens.

3. Reveal tax implications: Are you paying too much ?

In most cases, you’ll need to provide some proof that your home has been over-assessed. An appraisal is strong evidence, but some counties may be placated with recent comps or comparisons of the tax assessment on your neighbors’ homes.

4. Understand your home’s value according to online listing sites in case you decide to sell

If you’re beginning to think about a move, knowing the value of your property could lead to an accelerated sale timeline. With so many people beginning their home searches online, it’s wise to check your home’s history and value online to ensure accuracy.

“Listing sites use algorithms,” Toll points out. Those algorithms take into account the character of the property, square footage, acreage, number of bedrooms… “But they don’t know about upgrades.”

If your home’s value isn’t accurately represented by listing sites, you can work with US  to update the details on the MLS (multiple listing service) or through your county’s assessment and taxation office, depending on the source of the incorrect information.

5. Learn how much equity and borrowing power you’ve built up

If your home has increased in value, you may have accrued equity. That can benefit a homeowner in many ways. For one, it provides a better understanding of your overall financial situation, enabling you to make smart decisions.

6. Consider refinancing your home

You may opt for a cash-out refinance, which allows you to tap into your equity at a fixed rate.. As opposed to a HELOC or a home equity loan that essentially adds a second mortgage, a cash-out refi is a brand-new mortgage with a higher loan amount than what you currently owe that provides a payout (that payout comes from the equity you’ve accrued). Some homeowners may be able to borrow up to 80% of the loan-to-value ratio, leaving 20% equity in their home.

There are advantages to this option, which often comes with a lower interest rate than an equity loan or HELOC. A lower interest rate could save you money in the long term.

7. Determine the best time to sell your house

Finding out the value of your home “is the number one factor in deciding when to sell, whether you’re considering relocating, “right-sizing,” or cashing out.

Is this the year you plan to sell your home?  If you check your home’s value regularly, it just might be. According to the Wall Street Journal, more than seven million people move to a different county.

However, if you’re unsure, listen to your gut, even if you’ve seen a huge upswing in value. We find myself talking people out of selling because they’re just doing it for weird reasons. I think the biggest thing is don’t sell just because your home has value on it. Unless there’s something strategic in that.

If you don’t have a reason to move, whether it’s downsizing or relocating to a new neighborhood or city, don’t just sell to sell. And remember, with home prices on the rise, your next home may cost more too, so if you do move, be prepared to pay more.