A home appraisal is a process that determines the overall value of a home and property. It involves several factors to determine the overall dollar amount of which your home is worth. This is important because it can be used as a tool for refinancing or selling your property. Here are a few reasons why it is so important for the homeowner to obtain one.
Determines The Resale Value
When a real estate appraiser puts together an appraisal report, they are looking for the upgraded value of the home. For the past few years, if you have put a lot of upgrades into your home, it may have increased in value since you first purchased it. Some upgrades may include things like:
- New roof and siding.
- New porch or patio.
- Landscaping and hardscaping.
- Interior upgrades such as a new HVAC system or hot water tank.
- New paint and flooring.
- Additional outbuildings.
Something as simple as cleaning up the property space and tree trimming can also boost value. With real estate appraisals, making small upgrades can increase the resale value. This can allow you to get more out of a future home sale.
Compares Your Home To Other Homes In The Neighborhood
Part of the appraisal process is taking a look at recent home sales nearby. This may include homes that sold both below or above market value. The appraiser will look closely at homes with comparable value that have recently sold. From there, they will use the average sale amount to determine the value of your property.
If you are looking at refinancing your home or taking out a second mortgage or home equity line of credit, an appraisal is a real asset. In fact, some banks or lenders may require you to have one done as part of the loan process.
Recent upgrades of any type can help boost home value. Real estate appraisers look for not only the condition of the property but also how well the interior is maintained. When the appraisal shows an increase in value, the equity of the home goes up too. This makes it more likely your new loan will get approved.
Can Lower Your House Payment
For some home loans, the underwriters require that the new homeowner have PMI or private mortgage insurance on the home. This helps protect the lender in the event the homeowner defaults on the loan. The good news is that after a period of time if the home has increased in value, PMI insurance can be dropped.
Getting it appraised at over 20% of its original value in equity can save you hundreds annually in home loan costs. If you feel your home has gone up in value, see about getting it appraised right away.
There are a lot of advantages to getting your home appraised. A good appraisal is the result of a lot of hard work on behalf of the homeowner. It gives you several advantages in the banking world. From lowering costs to gaining a significant profit from a future sale of the home, the sky's the limit!
Contact a professional for more information about real estate appraisals.