How to Determine Your Home’s Value

Today you can not only see your home from the air on Google Earth, but you can find out roughly how much it is worth. The two biggest free websites that offer this service are Zillow with 90 million homes listed andCyberhomes now up to 76 million.

Knowing the estimated current market value of your home as compared to the total mortgage debt – its loan to value ratio or LTV – is a key factor in determining if you qualify for any one of several programs that will reduce your mortgage payments. In some areas like Phoenix, home values are now half what they were at their July 2006 peak, yet the Obama Administration’s Making Homes Affordable loan refinancing program only allows an LTV of 105%, meaning that to qualify for this program, your mortgage obligation has to be no more than 5% over your home’s current value.  If your home’s estimated market value is $200,000 but you have more than $210,000 in total mortgage debt, that could be a problem when you apply to refinance your loan.

Beyond refinancing, there are multiple options available if you can no longer afford your mortgage, such as loan modifications, short fi,  and short sale. Otherlenders and servicers have different guidelines. To chart your best course, it’s a good idea to get at least a rough estimate as to what your home is now worth.

How do  Zillow and Cyberhomes work? They buy real estate information from commercial data aggregators including street addresses, square footage of homes and lots, tax assessments and specifics such as number of bedrooms. They track prior sale prices of comparable homes and employ an algorithm to estimate your home’s market value.

Simply log onto your choice of sites, and enter your street address. It makes sense to use both websites and average the values because there are consistent differences.

The estimates work best in a development where there are multiple similar models on a street and little variation between them. They are least effective in an area with a lot of individual variety.

Both  Zillow and Cyberhomes are good valuation starting points, but the best way to get an accurate appraisal is to hire at least two licensed appraisers who are experts in your type of property. Refinancing is the best option to both lower your mortgage payment and preserve your credit, so if you plan to go this route use the web estimates as a starting point only. If you’re in the ballpark for a new mortgage, then hire an expert for a more precise home value assessment.

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