The big talk in real estate right now is home value appreciation. In fact, you can see more about the rising home trends in our articles on Greeley Real Estate Trends and Why Housing Prices in Colorado are Increasing so Much.
Most home owners I know have seen very large gains in their home value…even if they just purchased 6 months ago.
If you want to sell, that is fantastic news for you–you can capture that gain and get into a great new home. Given that interest rates are very low and there are many buyer incentives (including down payment assistance that doesn’t need to be repaid), it can be very attractive to buy right now even with higher prices.
But what if you don’t want to sell?
With home values up, you may want to refinance
There is a great option available to you: refinance.
In fact, quite a few of the home buyers I helped find a home with over the last couple of years are now refinancing and getting into much better mortgages.
What are the advantages of refinancing in Northern Colorado?
If your home value is up, you will have more flexibility in the loan you choose. Here are some common things I’m seeing people do:
- Lock in a lower interest rate – yes, rates have continued to go down
- Eliminate mortgage insurance – that can be a few hundred dollars per month!
- Switch to a Conventional (cheaper) loan
- Switch to a 15 year loan…great if you’ve been paying down your mortgage for a few years already
- Eliminate a mortgage payment or two
- Get cash back
How I used higher home prices for my refinance
We purchased our primary home just over two years ago. Given that I’m a real estate agent, I’m very close to the lending side of things and knew it was a good time for me to refinance.
Here’s what I got out of my refinance:
- I skipped two payments! That’s nice savings.
- My monthly payment will be $316 lower…thanks to lower interest rate and elimination of mortgage insurance.
- I received about $1,000 back at closing.
- I will get another couple of thousand back from my old mortgage escrow in a couple of weeks.
What should you know before refinancing?
When you refinance, your home will almost certainly need to be appraised. Depending on the circumstance, and appraisal can run around $300 to $500 (although sometimes more). Given the benefits of refinancing, this cost is oftentimes well justified. But if your house doesn’t appraise for as high as much as you expect, then you will be unable to capture the benefits you expected and will instead just be out the appraisal cost.
Because of this, it’s good to have a good idea of what your house will appraise for ahead of time.
Is Zillow Zestimate a good way to value your home?
Zillow uses algorithms to determine home value based on nearby homes with similar statistics. Zillow cannot, however, know the quality and unique factors about your home that buyers will be willing to pay for.
In general, if you live in a neighborhood that contains very similar homes in very similar condition, Zillow can be a good guideline.
If you live in more of a unique neighborhood, or one that is perhaps older and has seen a lot of variance in home condition over time, Zillow will likely not provide a very accurate price.
When it comes to paying for an appraisal and trying to hit a certain value, I would not recommend on relying on Zillow Zestimates to help you determine if you should refinance.
What is the best way to figure your home value?
The good news is most real estate agents are happy to do a valualtion of your property for free. If provided by a competent real estate agent, this sort of value estimate will be much more accurate. Real estate agents are much more in touch with the local markets, know what buyers are looking for, and also understand what appraisers look at when valuing homes.
The Ferguson Team provides home values free of charge, including excellent detailed reports. It’s a great way for us to meet people, provide a service to them, and demonstrate our expertise.
In fact, our services are broadly used and trusted by many local businesses, banks, and financial institutions. We follow the similar methodologies appraisers follow, meaning we are able to provide accurate prices for your home.
The best option for you if your home has gone up in value
There are numerous options you can choose from if you are enjoying the rising prices in Northern Colorado. It may be best for you to sell and capture that appreciation. It may be best for you to refinance. Or it may be best for you to do nothing.
If you’d like to talk to a local expert about your situation, we’d love to talk to you and provide our input! We can help sell your home, connect you to our wonderful network of mortgage lenders, or simply provide you a free analysis of your home’s value.
As always, you can reach us at 970-573-6441 or online here.