What is
a Home Valuation?

A home valuation determines the current market value of a residential property. It is crucial for real estate transactions, preventing excessive borrowing and financial losses. When getting a mortgage, the home acts as collateral. If the borrower defaults, the lender may sell the property to recover funds. A thorough home valuation safeguards the lender's ability to recover costs if the mortgage is not fully repaid.

The value of your home is calculated using a combination of factors including its location, age, size, condition, any improvements or renovations made, and recent sale prices of comparable homes in the neighborhood. It also factors in current market trends and local market conditions. The valuation tool is dynamic and can be influenced by data such as inventory trends, interest rates, and current buyer sentiment.

Online home valuations provide a good starting point and offer a general estimate of your property’s worth. However, they may not factor in recent renovations, unique features, historical value, architectural significance, and subjective market perception that could impact your home’s actual market value. For the most accurate assessment, consider scheduling an in-person appraisal.

Knowing the value of your home is more than just a number—it’s an essential financial tool. A home valuation is often required when refinancing, since lenders base the loan amount on your property’s worth and typically allow you to borrow between 75% and 96.5% against it. The more equity you have, the better the terms you may receive. A valuation is also necessary if you’re applying for a Home Equity Line of Credit (HELOC), as most lenders require at least 20% equity before approving you.

Valuations are also useful when planning renovations. If your home is already priced at the higher end of your neighborhood, investing too much in improvements could make it harder to sell. By understanding your property’s current value and comparing it to nearby homes, you can make smarter decisions about which upgrades will actually increase resale value rather than price you out of the market.

Even if you’re not selling or refinancing, knowing your home’s value can give you peace of mind and help with long-term planning. It allows you to understand how much equity you’ve built, what you could potentially borrow, and what your options might be in case of unexpected financial changes or a sudden move. In short, a valuation gives you clarity, security, and confidence in managing one of your biggest assets—your home.