Did you know most people in America have no idea what the actual market value of their home is? It’s true; some think their home is through the roof in value, while others didn’t know they owned a gold mine of real property. Here I want to explain to you the worth of knowing your home’s value all the time, not just when you are getting ready to sell, because why should you be guessing the value of one of your most expensive assets?
Do you really want to pay Uncle Sam more money then he asks for? Think about it. If you do not know your home value, then the Tax Assessor can go ahead and throw a blanket value on your home that is way above market. Why should you pay the taxes of a $500k house on a property that may in fact only be worth $450k? In Salt Lake City, that is about $400 in taxes! I’m sure there are a lot of other things you want do with that money.
2. Home Equity Loans
Sometimes we fall on hard times financially. That, or we just find that we need a little bit of extra cash for extenuating circumstances. If you don’t know what your home is worth, than you don’t know what your options are. If you have high interest car loans, student loans, credit card loans, or say you want to start up your own business, you can use a home equity loan for all of these things listed. Or a home equity loan could save you financially in a time of desperation.
3. Home Insurance
Insurance companies give you a policy to cover your home at the value they have appraised it at and nothing more. So if your home is insured in 2010 and then a disaster happens in 2017 in which you must file a claim, your claim is not going to cover the value of your house. Given the time between 2010 and 2017, it is possible that your home may have even doubled in value. You must know this about your home to plan for these kind of unfortunate events.
4. Private Mortgage Insurance
Do you want to lower your mortgage payment by 10%? For many homeowners, we are talking $150 a month or more. If you bought your home with less than 20% down it is very likely that you have private mortgage insurance commonly known as PMI. The cost of PMI is roughly $55 per month per $100,000 borrowed. Think about how much your home is worth, and then gently smack your palm into your forehead! Utah’s real estate market is appreciating so fast that it is very likely if you have owned your home for just 2 years, making the minimum payments, you may now be eligible to have this extra cost removed from your monthly payment. Go refinance!
5. Is it Time to Sell?
Like any valuable and tradable asset, you need to know the right time to sell and the right time to hold. How are you going to do that based on conjecture? You may think right now, “I’ll just go to Zillow and check my Zestimate,” or use Realtor.com’s home estimate. So far in my career, those automated algorithms used to designate your home value have yet to be right or even close. You need a local real estate professional to come to your home and review your property with you, or even better have 2 or 3 to make sure you are making the best choice.
The importance of knowing your home value cannot be understated. It never hurt anybody to discover their home’s worth, but it has hurt plenty of people financially, and probably emotionally, to lose money on their home, because they never sought professional guidance.