Find Your Home Value
Home Appraisal Tips & Advice
California Home Values and Property Taxes: Are the Laws What They Should Be?December 22, 2008
California is once again rethinking Proposition 13, the law that bases home property taxes on the purchase price of a house. Will a new property tax law pass? California Home Values Are Falling: Can There Be an Upside?
September 30, 2008
Home sale prices are down and most people have seen a loss of home value in their neighborhood. Can there be a hidden benefit? Selling Your Home Successfully in Today's Market
September 8, 2008
Yes, the home selling market has slowed in the past year; however, houses are still being purchased on a daily basis. What is the secret to successful home selling? Home Value Plays a Big Role in Refinancing
By Karen LawsonHome Worth Columnist
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Reducing interest rates is the primary reason most homeowners consider refinancing, but cash out refinancing can also provide funds for paying off high interest rate debt or making home improvements. If you want to use some of your home equity for these purposes, your current home worth provides a starting point for managing your financial needs.
Home Worth and Borrowing Power
Free home value estimate tools are widely available online and can provide a general idea of what your home is worth. The next thing you'll need to know is the approximate balance of your mortgage. Your actual home value and mortgage payoff may differ from your estimates, but estimates can help you decide if and how to access your home equity. Home equity is the difference between your current home value and your mortgage balance.
Lenders use a ratio called loan to value (LTV) to determine how much you can borrow. Your current mortgage amount divided by your home value provides a percentage. This is your LTV. If your mortgage balance is $160,000 and your home is worth $250,000, your LTV is 64%. To avoid paying mortgage insurance, you need to keep your refinancing at or below 80% LTV. In the above example, you could refinance for $200,000 not including costs and fees. Free home value estimate calculators and other calculator tools can help you compare the cost of refinancing options. You want to know the annual cost of financing or annual percentage rate (APR) for each refinancing option you consider. Other home equity financing options include home equity loans or an equity line of credit. It's important to remember that your home serves as collateral for all of these financing options.
About the Author
Karen Lawson is a freelance writer with extensive experience in mortgage banking. She holds BA and MA degrees in English from the University of Nevada, Reno.