Your Home's True Worth

Borrowing for beginners

There's more than one value for your home

Home values have been rising for more than 10 years, and there's no end in sight. Even if you don't plan to sell or refinance, it would be interesting to know what your home's worth, wouldn't it? You may be surprised to know that your home's value depends on the purpose of the valuation.

Different valuations for different purposes

There are three main measures of home value:

  • Market value is what a buyer will pay for it.
  • Lender value is based on an independent appraisal for a purchase or refinance.
  • Assessed taxable value is the base your local taxing authority (county or city, for example) uses for property taxes.

These three valuations can be different for the same house.

What affects a home's value?

Consider these important influences.

    • Age
    • Condition
    • Square footage (usable space is most important)
    • Lot size
    • Location
    • Renovations and improvements
    • Inventory in your neighborhood (low inventory = seller's market = higher prices)
    • Comps - prices of comparable homes sold recently
    • Employment (strong or weak?)
    • Wages (rising or falling?)
    • Cost of goods and services
    • Credit environment (rates, availability)
    • Natural disasters
    • Wars
    • Civil unrest

You can see the interaction of these variables can have a big impact on your home's value. Two very similar homes could have different values based on location, age, or condition, and a disruption in the supply of building materials is likely to raise housing prices.

Home valuation tools

If you're curious about your home's value, there are different valuation tools available, including some you can access online.

Zillow, Redfin, and have home value estimators. They're easy to use - just enter your address - but they are based on standard data and don't account for variables like your home's condition or upgrades. Similarly, real estate firms like RE/MAX have online automated valuation programs.

You can review your property tax assessment, but the value of your home is unlikely to match its market value. Property tax values tend to lag behind the market.

The Federal Housing Finance Authority (FHFA) publishes a House Price Index if you're interested in regional trends.

Licensed real estate agents can provide a broker price opinion (BPO) or a competitive market analysis (CMA), which take into account current market conditions and comparable properties. If you are planning to sell your home, your agent will help you arrive at a listing price.

Finally, a professional appraiser can value your home, but an appraisal is expensive and usually only called for by the lender when a borrower is taking out a mortgage.

Your home: Priceless

No matter what the dollar value of a house, its true worth lies in the people who live there, the memories it holds, and lives it shelters. If you're ready to make a house your home, contact your CrossCountry Mortgage loan officer.

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