License #: 01275947

Keller Williams Realty

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Accessing Your Equity



Looking for a quick value of your home?


Click the link below for the type of valuation you would prefer.


1. Instant On Line Valuation                                         2. Full Professional Valuation


We recommend you read more about getting the right type of valuation. 

There is a difference in the outcome depending on which one you select. 



Many homeowners just want a ballpark number with no hassles from an agent. If tha's you, you're not alone. 

What they don't know is that there are different value results depending on why the report is done.


Choosing the wrong one could cost you big time 


Usally people look at the home value and subtract any mortgage amount and that's the equity.  It's a simple way, but it's incomplete.


The right question is how much do I have access to, and what's the cost of getting it, and what's left over.  


Lets take a closer look at the different types of home valuations, when they are used, and why they are different.

1. Market Analysis

2. Broker Price Opinion

3. Appraisal





There are two types of market analysis typically used today.

     1. On line instant value

     2. Prepared report by a local agent


These types of reports are usually free and the easiest to get.  

The danger is mostly in the on line valuation without the assistance of a licensed agent. Even Zillow discloses that the zestimates can be inaccurate and should not be solely relied on.  


If you have the report prepared by a local licensed agent, they can give you more details on why you home would be above average , just average or below average.  They know the area, they have been inside the homes you see on your report, and they can visit your home and give you an honest unbiased opinion.


The online instant report is usually done if:


1. You are just curious

2. Your neighbor just did something

3. Your'e thinking about selling

4. You want access to equity     


The agent prepared report is usally when the owner is closer to selling thier home, and the real numbers matter more, and they meet the agent in person at the home to review it. 


With the agent's assistance, the value reflects what the final sales price may be before presenting it to the market.  Only after it is exposed to the market will the real market value be known.  This valuation tends to be the highest projected price.  





A broker price opinion report has more detail and the person preparing the report has at least driven by and took a front photo of the comparables homes in the report and have a checklist of items they must complete on the subject home in order for the report to be accepted.

They have been used in the past by banks that owned property in the crash starting in 2008.

They are also accepted by some legal, tax, or financial institutions for special circumstances, including stepped up tax basis or probate when a divorce or death has occured. The values here usually refect a previous date's value, not current market value. Some however will need an appraisal done and won't accept a "BPO".

These reports can cost between 150.00 to 200.00 dollars depending on the criteria and location of the subject home.     



There are different types of appraisals types used to establish values. The "comparable sales approach" will be discussed here.  The two most common are:


     1. Full Appraisal

     2. Desk Top Appraisals


The full appraisal can be used for many purposes by different people.


1. Sellers in preparation for listing a home

2. Buyers lender during a home purchase

3. Legal and tax professionals

4. Government agencies    


Full Appraisal


This report is the most detailed and has parameters a licensed appriaser must follow.  It needs to be able to withstand any legal proceeding that is in process or could occur in the future.  It's several pages long and gives detaild photos and values for spcefic features, upgrades, condition and  market trends of a community.

It takes about a week to prepare and fees start at about 650.00 dollars.   

It's most commonly used by lenders in home purchase  to protect the lender from over lending based on the LTV (loan to value ratio). The buyers down payment and projected LTV at close can affect the loan approval despite the appraisal report. 

Keep in mind, It does not always reflect what the buyer is willing to pay, or what a  pay for the home.  If the right situation occurs the buyer may ignore the appraisal and pay a higher price for the home, or the buyer could decide the market value lower than the appraisal and could challenge it. 


Desk Top Appraisal

This is most commonly used by lenders in the refinancing of a home or setting up an equity line of credit.  It's the first look at it. Depending on the type of loan or the value in the desk top appraisal a full appraisal may be needed or could be waived because the equity position after the loan is very strong.   This is at little or no cost depending on the lender, and takes just a couple of days. 



Now that we know what methods are most commonly used and why,

we need to look at the cost of getting the money and how much equity we can access. 


1. Selling the home. 

     This is calculated by the estimated sales price - minus the loan pay off - minus the closing costs- minus any capital gains withholding or government garnishment.   The leftover equity is yours to use as you wish.  Probate or 1031 exchanges will have further implications on how much equity you have access to. 


2. Cash out RE-FI  

     This is when you extract cash from the home above what your loan balance is, and the new loan replaces your current loan and starts a new rate and term

When interest rates are higher than your current loan rate this method is rarley done unless there are no other alternatives.

Depending on the loan type, you may be able to get up to 100 % of the homes value, but usually caps out at 75% to 85% leaving 15% after the refi. 


3. Heloc ( Home Equity Line Of Credit )

     In this case, the first trust deed is in place and a second loan is take out. They can be used both during or after a home purchase.

Because it is in 2nd position the rates will be higher than the first loan. This is popular when there is plenty of equity in the home and

debt consolitation or special project costs are needed.  It usually turns non tax deductable interes loans at higher rates into a lower tax deductable loan. 

The costs of theses loans are fairly cheap and takes only a couple of weeks to put in place.  However they too have loan to value limits, so you most likely will not be able to access all your equity. 


Some home loan options not described here include reverse mortgages, hard money loans, AITD loans.

These and other types of specialized loans are used every day when the situation arises. 


Feel free to contact us today to see what your true equity position is and the best way to access it. 

Even if you don't plan on selling your home, we would like to help you make the right choice.



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