The Havasu real estate market changed dramatically over the past few weeks. At the beginning of the year, real estate in Lake Havasu felt like it simply flew off the shelves. Buyers snatched up properties almost as quickly as they were listed. Then, COVID-19 hit. Selling a home during that time meant changing the way we did business. Now, things have started opening up a bit. Thinking about selling your property soon? Does it need a few repairs/updates first to make it competitive with other properties on the market? Use your equity to take care of your “honey-do” list. How do you know how much equity you have?
How to Calculate Equity
In simple terms, equity is simply the difference between the value of your real estate in Lake Havasu and what you owe on your property. For example, let’s say you bought your house in 2018 for $200,000. Today, it’s worth $270,000. Your current mortgage balance is $188,000. Based on this simple calculation, your equity amounts to $82,000. Lenders look at this when deciding how much you can borrow against it to help you pay for the repair or remodel of your home.
Lenders use the loan-to-value (LTV) ratio when determining risk involved in lending you money. A high LTV ratio reduces the chances of approval for a home equity loan on your real estate in Lake Havasu. Banks like to see at least an 80% LTV from borrowers. This gets you better interest rates, too. How do they determine LTV? Take your current loan balance and divide it by your current appraised value. Then, take that number and multiply it by 100. Based on the numbers we discussed above, that would be $188,000 / $270,000 = 0.70 x 100 = 70%. While some banks will still approve you for an equity loan, your interest rate will be much higher.
Adding Value to Your Home
When you add value to your real estate in Lake Havasu, you increase your equity. Adding curb appeal helps bring up the value of your home. Keeping your property well maintained also adds value. But before you invest a lot of money in upgrades or improvements, do some research to see which projects offer the best return on investment. That way, you get the most bang for your buck before you list your home on the Havsau real estate market.
Alexis Steel – 928-303-2199
Keller Williams Arizona Living Realty
Search homes at: www.TheHavasuHome.com