Home Insurance Articles
How To Accurately Estimate The Value Of Your Home
2010-01-02
Properly maintaining a home involves keeping up-to-date home insurance coverage. Your home insurance policy is based on the current value of the home. Estimating this value incorrectly can cause the price of your home insurance to be higher than necessary, or in you not having enough coverage when disaster strikes. While paying attention to similar homes that have sold within the neighborhood is a good start, giving your insurance company an uneducated guess about your home's value is not reliable. In the event that you need to call on your homeowner's insurance, you want to be sure that you have the proper amount of coverage to keep you financially on your feet - and in your home. Here are some tips on how to accurately estimate the value of your home.
First, talk to the experts, both in the real estate industry and the construction industry. A real estate agent from the area will have a good grasp on the current neighborhood market and know what the house would potentially sell for. Additionally, it can also help to have a home inspector or a home builder come look at the house inside and out. These professionals will be able to give you an accurate estimate as to how much it would cost to build your house from the ground up if it was completely ruined tomorrow. Getting these estimates will help ensure that you'll have the proper fund in case something were to happen to your home.
Many homeowners confuse the previous purchase price of the home with the current value. It is possible for the current market value to be more than you paid for it, or substantially less than the purchase price. Therefore, when giving an estimate, it's not a good idea to use your mortgage as a starting point. Use the inspections and the input you received from professionals as the base of your home value estimate. While you don't want to underestimate - as it will result in you paying smaller insurance rates, but not enough coverage - you also don't want to over estimate, as this will lead to you paying too much for coverage. Find middle ground and estimate as accurately as possible and you will be good to go.
As important as it is to get an accurate initial home estimate, it's also imperative to keep updating that estimate as time goes by. Perhaps you added on to your home, you got a pet or have obtained more valuables that you wish to have covered. Additionally, as the economy slumps, the cost to replace a home is also increasing. Adjusting your home insurance coverage for these things will keep you adequately covered in case of disaster.