Frequently Asked Questions
What is a home's value?
Home value has a slightly different meaning if you ask a homeowner, appraiser or tax assessor. But in most cases, home value means the amount for which a house would likely sell, otherwise known as the current market value.
What is a home appraisal?A home appraisal is an objective estimate by a professional appraiser of how much your home is worth. To find the value, an appraiser visits your home, takes a detailed inventory of the property and researches the local real estate market. The estimate is based on many factors, including recent sales of comparable homes; neighborhood characteristics; and age, size and condition of the home.
When do I need a home appraisal?
An online home value calculation gives a general idea of how much a home is worth. A home appraisal is an official opinion. A lender will usually order an appraisal when you apply for a mortgage to buy a home or to refinance a home loan. The appraisal fee, which usually runs about $300 to $400, is included in the mortgage closing costs.
How does this tool estimate how much my home is worth?
The home value calculation uses data gathered by Redfin. To calculate the Redfin Estimate, Redfin considers hundreds of data points about the market, the neighborhood, and the home itself, like whether it has a water view or is located on a busy street.
How does the home value impact what financial decisions I can make?For home buyers and home sellers, knowing current market value helps you make smart decisions about how much to offer on a house you want, or how to price a home you’re selling. As a homeowner, value is also directly related to your home equity. Equity is calculated by subtracting the mortgage balance from the home’s current market value. You build equity as you make monthly payments and pay down your principal, but other factors, most notably home price appreciation, can speed up or slow down the equity-building process.
With enough equity, you may be able to refinance into a loan at a lower interest rate or drop your private mortgage insurance (PMI). You might even be able to remodel your bathroom or pay off credit card debt through a cash-out refinance, home equity loan or home equity line of credit.
What is home equity and how does it impact my financial freedom?
Home equity is the value of your home minus the balance of your mortgage. To put it another way, home equity represents the portion of the house you’ve “paid off” and therefore own. Equity increases slowly with each mortgage payment, but may grow faster if you make value-boosting home improvements or if home values rise in your area.
As a homeowner, equity is a valuable asset that directly affects your financial freedom. More equity means more ways to achieve financial goals. You can make home improvements, consolidate debt, cover emergency expenses or even pay college tuition by tapping home equity.
Don’t cash out or borrow against home equity just because you have it, though. Tapping equity can add years to your mortgage payoff and means less cushion if the home loses value. And if you have trouble paying the loan for any reason, such as losing your job, the lender could foreclose on your house.
Why might I want to refinance my home?
Refinancing replaces your existing mortgage with a new loan. Some reasons for refinancing are directly related to home value, while others aren’t. Refinancing might be a good idea if you want to:
What factors can affect how my home value changes over time?Unlike other assets, such as your car, a home often appreciates over time. In general, real estate appreciates because there’s only so much space for new development. As time goes on, there’s generally more demand for less land, driving up value. If demand drops, however, prices could go down.
- How much the house sold for in the past
- Quality of the neighborhood
- Market conditions, such as the number of homes available and strength of the economy
- Tax assessment
- Nearby amenities
- Square footage
- Age and condition of the house and property
What homeownership costs can I control?
Home value can be affected by factors beyond your control, but you can still manage the ongoing costs of homeownership. These include:
How can I track multiple homes?
Once you’ve linked your first home, you can easily link additional properties on your net worth dashboard.
How can I change the details of my mortgage?Unfortunately, it’s not yet possible to self-report or edit your mortgage information, but we are working on adding this functionality soon!
How can I provide feedback?
If you have any feedback, please email us at email@example.com. We appreciate any feedback you have and will use it to inform how we invest in this experience.
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