Determining a home value estimate for a refinance is one of the essential steps toward actually receiving your refinance loan approval and closing on your loan. Even though your lender will go through the paces needed to confirm your home’s value, you might want to have an idea of what it’s worth before you even approach a lender. In today’s digital age, you don’t have to be a banker, an appraiser or a real-estate professional to calculate a ballpark dollar figure. Even if you don’t hit a home run by arriving at the exact figure, you probably won’t be too far off base.
A Multi-Pronged Approach to Value
Unless you’re a professional appraiser, you may be better able to determine your home’s value by using more than one valuation tool. If you’re not opposed to doing a little research, and calling on some professionals for assistance, you might be able to reach a preliminary value at little to no cost.
Researching Comparable Property Sales
When you first bought your home, the appraiser considered comparable property sales. And now that you’re refinancing, an appraiser will revisit this step since the comparables must be recently sold properties. But even before your refinance lender hires an appraiser, you can do a cursory search to find comparable properties. Just because properties on your street have recently sold, it doesn’t necessarily mean they are comparable to your home.
Look for at least three recent home sales close to where you live that have similar features, sizes and conditions. You can find sales online at real-estate sites that include MLS listings, and you might be able to get this information from a local realtor. Your house will not exactly match any of the comparables, but you can get a rough idea with this comparison.
Estimating With Online Tools
You can find numerous online home value estimator tools simply by performing a general search using the words, “what is my house worth?” Lots of real estate sites, such as Zillow and Redfin, as well as numerous lender sites, offer online estimators that ask you to type in your address for an estimate of your property value. Although these values might be right on target, you may want to take them with a grain of salt unless you see a “confidence score” that indicates how close to market value the site’s valuation is supposed to be.
Checking Comparative Market Analysis
If you want to lean into the expertise of a trusted local real estate agent, you can request a comparative market analysis (CMA). A CMA does not take the place of a comprehensive property appraisal, but it does offer a professional agent’s review and valuation of the market where the property is located as well as the property itself. Typically, agents furnish CMAs as a listing tool, and since they won’t make commission on a sale (since you’re refinancing instead of purchasing), they might charge you a nominal fee for this service.
Using the FHFA Calculator
A quick and easy online tool is the House Price Index (HPI) calculator offered by Federal Housing Finance Agency (FHFA). Visit FHFA.gov and click on the “Data & Tools” menu button. When the page loads, click on “Tools” from the left-hand menu, and when that page loads, click on “HPI Calculator.”
In the drop-down menus for the first three calculator fields, choose your state, property purchase quarter and valuation quarter. After entering your home’s purchase price in the fourth field, click “Calculate.” This home value calculator does not give the actual value of a specific home, but it does calculate the projected value of a property based on the statewide average appreciation rate.
Hiring a Professional Appraiser
Your refinance lender will base the amount and terms of your refinance in part on the appraisal from the appraiser that the lender chooses. But any homeowner can hire an independent appraiser at any time for various reasons such as determining whether there’s sufficient equity in the home to move forward with a refinance.
- If you find your home is worth less than you owe on it, check with your lender to see if it participates in the Home Affordable Refinance Program (HARP). The program is designed to help "underwater" homeowners refinance their mortgages.
- Your new lender will order an appraisal as part of the refinance process. To avoid getting double-charged, find an appraiser approved to do work for the lender. This way, when you start the process, the appraiser can certify the appraisal to the lender as opposed to getting a whole new report.
Victoria Lee Blackstone was formerly with Freddie Mac’s mortgage acquisition department, where she funded multi-million-dollar loan pools for primary lending institutions, worked on a mortgage fraud task force and wrote the convertible ARM section of the company’s policies and procedures manual. Currently, Blackstone is a professional writer with expertise in the fields of mortgage, finance, budgeting and tax. She is the author of more than 2,000 published works for newspapers, magazines, online publications and individual clients.