Situations When a Home Valuation May Be Necessary.
Lenders base the amount of their loans on the value of your property and usually allow you to borrow a maximum of 75% to 96.5% against your property. Knowing what your home is worth allows lenders to calculate your equity. The more equity you have, the better terms you’ll receive on your refinance.
If you’re doing home improvement projects to increase the resale value, you want to make sure you’re not pricing it out of the market. If your home is already priced on the high end for your neighborhood, too many improvements could make it more difficult to sell. A valuation shows how your home compares with others, guiding your improvement decisions.
If you want to borrow cash against your home, a Home Equity Line of Credit (HELOC) could be a good option. Most lenders require at least 20% equity in your home. A valuation helps confirm how much you can borrow without overextending yourself.