Property valuation in common terms is what a property is worth. Practically, it is the amount that someone pays for a property. The market value is a willing arm’s length transaction between a buyer and a seller after proper marketing of a property. Property valuation is basically the initial step in anything that involves property. Be it for the banks to lend you money or refinancing your loan or even selling the property. This is why understanding the perks of property valuation is vital.
If you’re a homeowner looking to buy an investment property, a low-cost and convenient way to fund the purchase is using your home equity. The house equity you have worked so hard to build can be leveraged to buy a second property to rent out for the sweet additional income or to be used as a vacation getaway without a cash deposit.
Ever thought about what happens if you found your perfect property, looked at the price, only to realize that you are coming short on your borrowing capacity? Sounds disheartening, right?
After all, borrowing capacity is often considered a key factor when buying a home. Your borrowing capacity affects how much you can spend off on a property, thereafter, determining your home loan.
When you swap your existing mortgage for a new, larger mortgage, borrowing against your home equity, it is called a cash-out refinance. You can borrow more than you currently owe. The funds are released to you directly, and you can use them to fulfill any of your financial needs – from paying a high-rate debt to purchasing a new car. However, to use cash-out refinance as a way to refinance a home loan, you must have equity built up on your home.