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Value Check: The Ultimate Guide to Secure Your Dream Home and 5 Whopping Errors to Dodge

What is a Value Check? Mortgages are a significant part of adulthood. It’s like a rite of passage that introduces you to the world of real estate. Deemed as one of the biggest investments of your life, it’s crucial to do a thorough value check before plunging into this commitment. We’ll guide you through this daunting process with simple language and practical advice inspired by Suze Orman and Robert Kiyosaki.

What Is Value Check

Value Check 101

Performing a value check means assessing the worth of a home before you invest in it. It provides essential information for both buyers and sellers. For buyers, a value check ensures that they pay a reasonable amount for the property. Sellers, on the other hand, get an opportunity to set competitive prices for their homes.

There are two main methods to value a property:

  1. Assessed value
  2. Appraised value

What is Assessed Value?

The assessed value of a property is determined by local government authorities for taxation purposes. It’s calculated based on the property’s characteristics, recent sales of comparable properties, and cost of construction.

Learn more about assessed value here.

What is Appraised Value?

Appraised value is the estimate of a property’s market value, which is established by a certified appraiser. Appraisals are necessary for mortgage companies to confirm that the loan amount requested by borrowers aligns with the property’s actual worth.

Click here to enrich your understanding of the home appraisal process.

The Importance of Value Check

Performing a value check safeguards your investment by providing the following benefits:

  • Determines the right price for your property
  • Helps secure a mortgage and negotiate interest rates
  • Prevents overpaying on taxes and insurance
  • Protects you from making unwise investment decisions
Value Check Mortgage

5 Whopping Errors to Dodge When Conducting a Value Check

You don’t want to end up with a lemon or be saddled with endless mortgage payments, do you? Let’s dive into five common mistakes to avoid while undertaking a value check.

Not Requesting a Loan Estimate

Buyers should always obtain a loan estimate from mortgage companies to receive a precise breakdown of the mortgage loan terms. It’ll demonstrate how much you can afford and help you compare the lenders’ offers.

Visit Consumer Finance for a comprehensive discussion on loan estimates.

Ignoring Local Market Trends

Keep in mind market trends that may influence your property valuation, including recent sales, the local housing market’s health, and upcoming infrastructure projects.

Underestimating the Power of Renovations and Upgrades

Renovating or upgrading your home can significantly impact its value. Don’t disregard the increased worth resulting from well-done improvements.

Failing to Get an Appraisal Contingency

An appraisal contingency is a clause that allows buyers to renegotiate or back out from the deal if the appraised value is lower than the agreed-upon price. Request it, and protect yourself.

Depending Solely on Online Property Valuation Tools

Online tools can provide rough estimates. However, they don’t account for unique property features or recent changes. Employ professional appraisal services or consult a local real estate agent along with online tools.

Home Value Check

History of Mortgages

Mortgages trace back to Ancient Rome, where properties were pledged as security for loans until repaid. Today, mortgages have transformed into an integral aspect of homeownership in countries worldwide.

Astonishing Mortgage Statistics

  • Mortgage debt in the US reached around $11 trillion in 2021
  • The average US mortgage rate fluctuates between 2.98% – 3.71%
  • About 63% of American homeowners retain a mortgage

Trivia Time!

  • The word “mortgage” originates from a Law French term, which means “death pledge.”
  • The city with the highest homeownership rate in America is Birmingham, Alabama.

FAQs on Value Check and Mortgages

Q: What factors influence the market value of a property?

A: Some crucial aspects affecting market value include location, property condition, demand and supply, and neighborhood comparables.

Q: How often should I perform a value check on my property?

A: It’s essential to conduct value checks whenever you refinance your mortgage, sell your property, or update your home insurance.

Q: Does the assessed value affect the market value of my property?

A: Not necessarily. Market value is more related to the fluctuating real estate market, whereas assessed value focuses on taxation purposes.

Value check is a crucial step to ensure your peace of mind and financial solvency when investing in a property. By performing regular value checks, you gain a sense of security and assurance that your investment is secure in the ever-changing real estate market.

Keep this guide handy to dodge common errors and make informed decisions on your journey towards homeownership.

Remember, a wise homeowner is an informed homeowner!

Mortgage Rater Editorial, led by seasoned professionals with over 20 years of experience in the finance industry, offers comprehensive information on various financial topics. With the best Mortgage Rates, home finance, investments, home loans, FHA loans, VA loans, 30 Year Fixed rates, no-interest loans, and more. Dedicated to educating and empowering clients across the United States, the editorial team leverages their expertise to guide readers towards informed financial and mortgage decisions.
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