Recognizing the value of your home, even when you're not considering selling or refinancing it in the immediate future, is an integral part of responsible homeownership. The valuation impacts various financial aspects such as Home Equity Line of Credit (HELOC), insurance premiums, and annual property taxes. Therefore, it's beneficial to do some research in advance. There are several methods homeowners can employ to approximate the worth of their homes, but remember, the figures obtained, especially online, serve as estimates. Websites like Zillow and Redfin employ algorithms to predict the market value of your home, but these estimations might not encompass all potential variables.
Insights into Home Values in 2020
The value of your home reflects its likely selling price in the current market. It's no surprise that the health of the real estate market influences your home's worth, although gauging the precise impact can be challenging. A recent USA Today article suggested that home values might decline until the economy recovers from the COVID-19 fallout. However, the silver lining is that the housing market tends not to fluctuate as significantly as the stock market. Despite the current unstable market conditions, some financial experts maintain a positive outlook for home sales through the remainder of 2020. To get the most accurate home value estimate in this volatile market, it's advisable to consult a reputable lender, such as CrossCountry Mortgage, and a licensed appraiser.
Utilizing Online Tools
Though no online tool provides a flawless estimate, the following sites are good starting points for evaluating your home's value:
- Zillow
- Chase
- Redfin
- NerdWallet
- Trulia
If each calculator gives a slightly different result, don't be alarmed. The algorithms these tools use consider various factors, such as the neighborhood's home values, the home's condition, location, and recent sales of comparable homes. Even a minor adjustment in these variables can significantly influence the final figure. For example, Zillow's "Zestimate" feature has a median error rate of 7.7% for homes not listed for sale nationally. Also, keep in mind that time influences the value; checking your home's worth at different times of the year could yield differing results due to seasonal variations in market activity. Your home's value can also be affected by factors such as changes in local amenities, shifts in the market, or alterations to the house's condition.
Engaging with the Experts
For homeowners seeking a reliable valuation, we recommend employing a professional appraiser. Those in the process of buying or selling a home must adhere to a strict timeline to ensure that all appraisals are completed promptly and accurately.
The Impact of Home Equity
Beyond merely establishing your home's value, it's crucial to understand the power of home equity. As a homeowner, your home's value directly contributes to your home equity - the difference between your home's current market value and what you owe. As you pay down your mortgage, you gradually build equity, enhancing your overall financial standing. Owning substantial equity provides opportunities to finance other significant aspects of your life, such as through a cash-out refinance or a HELOC. With sufficient equity, you might refinance your mortgage at a lower interest rate, eliminate your Private Mortgage Insurance (PMI), or even renovate your bathroom. A key reminder: Equity is a valuable asset that should be leveraged wisely, aligned with your long-term financial goals, rather than being viewed as an emergency cash source.
Should you have any questions, we're here to assist. Reach out to us at CrossCountry Mortgage today for a no-obligation consultation about your homeownership journey.
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