What Is Equity?

 

Equity is the value YOU own in property such as a house. It’s the difference between what’s OWED and what the property is WORTH in the current market.

The example this video shows – you have a house worth $300,000 today and you owe the bank $200,000.  Your equity would be $100,000.

If the house is valued at $500,000 in five years, and you still owe $150,000 your equity will be $350,000.

Equity grows if the property value goes up or if the amount owed goes down.  The key thing to remember, simple as it sounds, is that you “own” increases in value. The bank’s loan doesn’t go up if the home’s value goes up.

Equity in a home can be used as collateral for loans but a house is not a piggy bank. Home equity can become a key financial asset over time; treat it wisely.

Seaview Title … smooth sailing all the way home!

What Is An Appraisal?

 

In order to extend credit, lenders need to know what your home is worth.

The mortgage company you select will order an appraisal to determine the value of your proposed purchase.

Every house is unique; appraisers are trained and licensed for expertise in putting a value on properties. Appraisers don’t work for the buyer or the seller;  their primary mission is actually to protect the lender who’s risking money against the home’s value.

Appraisers have to weigh factors about the property and location – including size, condition and comparable properties – to appraise its current value.

They know how to focus on conditions that affect value; dishes in the sink don’t; damage and neglect do.

Appraisals lower than the proposed purchase price can affect transaction details. The seller might have to lower the price or the buyer might have to increase down payment or fund additional escrow.

Appraisal seems a lot like inspection, but they’re not the same.

You can think of it this way:

Appraisers report on value to the lender.

Inspectors report on condition of the house and major components to the buyer.

So, you can expect both appraisal & inspection in your transaction, and it’s good to keep the functions of each in mind. Remember, you are entitled to a copy of your appraisal, as well.

At Seaview Title, we help to educate our customers to take the worry out of one of the most important transactions they will face. We are here, from beginning to end, offering smooth sailing, all the way home!