Did you know that purchasing a home is one of the best investments you can make? It's true. Over time, the home you own is virtually a risk-free investment offering a stable and reliable return on your money.
Home equity is the difference between what your house is worth on the market and how much you currently owe on the mortgage. This means as you continue to make monthly mortgage payments, you owe less money, and gain equity in your home! Think of it like a savings account. But, even better than a savings account, you also get to enjoy and use your investment each day.
Since your home's worth or value is a big part of the home equity equation, your next question may be how is worth or value on the market determined? This is where your county assessor comes in. It is their responsibility to assess the value of all properties each year. By comparing current sales of similar properties, the assessor estimates how much a buyer might reasonably pay for your home if it was for sale. Two similar properties in different areas may end up with very different assessed values after certain factors are weighed. Those factors include general locations, distance from schools and shopping, and quality of surrounding properties and neighborhood amenities, such as parks.
Your property taxes are determined by the assessor's appraisal and their estimates on your home's value. This information is included in your assessment notice, which the county assessor mails out in May of each year.
To get a quick estimate on your home's equity, take your most recent tax bill total market value and subtract your mortgage loan balance. That amount is the home equity estimate in dollars and cents. You might be pleasantly surprised to see how your investment has grown over the years!
As you can tell, there are a lot of factors in determining the home equity that you really cannot impact. But if you look closer there are some positive steps you can take to maintain and grow your home equity:
Home maintenance and improvement. Keep an eye to the needs of your home as wear and tear occurs. Make basic repairs as damage occurs before the damage gets worse. Consider home improvement projects that enhance the utility and beauty of your home.
Always make mortgage payments on time. As you make each mortgage payment think of it as investing in your own future. The more payments you make, the more your home equity grows.
Review your property assessment notice. Knowledge is power and the more you know about how your property assessment is calculated the better informed you will be. You'll also be aware of any tax increases or decrease. If you have any specific questions you can contact your county assessor's office.
Buying your own home can be a great experience. Understanding and appreciating the value of home equity can make the whole process more enjoyable. Consider your a house an on-going investment--the more you put into, the more value it has!
