What's the house's value

If you're in the market for a new house there are things you must do before you obtain one. I've gone over the steps of mortgage pre-approval in a previous blog. After you get pre-approved and begin house hunting, you will find the house you want. It will be priced according to what the seller wants, but this isn't always the correct price for that house. This is very common, it's the way of the world to try to get the most for your money, but you shouldn’t have to pay more because of it. You must know the correct value for the house you want before you buy it, the term for this is the fair market value (FMV). By using real estate professionals, mortgage lenders, and property appraisers, you can know the actual value of the home, regardless of the listing price. It is important to establish the FMV, since this price could be lower than the asking price.

Fair Market Value is the price at which the home you are looking for should sell, based on certain criteria - square footage value, assessed value, and a comparative market analysis (CMA). Real estate agents create the CMA by comparing other homes on the MLS (Multiple Listing Service) either in the neighborhood you specify or by the attributes of that particular house. They look at houses already sold as a determination of accurate pricing. The square footage value helps to balance some of the variables houses in the same neighborhood; such as lot size or improvements needed/completed. Assessed value adds a third dimension to give a comprehensive picture of what the fair market value is for a home.

The home sale price is what a buyer must pay in order to purchase a home. This includes the financed amount and the amount of the down payment. In a previous week's blog, we discussed the advantages of mortgage pre-approval. Through this process your mortgage lender will assess your financial situation and calculate a maximum affordable sale price. This indicates what mortgage amount you can realistically afford. Assuming your enter the home buying process with a pre-approved mortgage amount, knowing the fair market value of the houses you are interested in will allow you to align your financial picture with the right property.

It is common for people to think a house is out of their reach because they can't afford the asking price. What they may not know is that with the help of mortgage and real estate professionals, they may be able to own the home they want in their desired neighborhood. At Intercoastal Mortgage Company, we help you secure a loan that can fits your needs, based on your income and budget. Contact me for more information or to follow up on a loan application.