North Four Corners News ♦ February 2023

My Home’s Value Has Increased.  Now What?

By Sarah Dye

Your house may now have the highest assessed value it has ever had (see previous article in this issue).  Congratulations!  You have automatically gained more equity in your property.  Equity is the difference between the current market value of a property and the total debt obligations against a property.  Many North Four Corners residents bought homes in the past when property values were worth less money.  Equity grows in a property if real estate market values grow (appreciate) over time.  This is exactly what has been happening in the neighborhood for years, and particularly so in the past three years.  Ten years ago the median value of a home in the neighborhood was $370,000.  Five years ago it was $445,000.  Today the median price of a home in North Four Corners is approximately $565,000.

In addition to equity, you may now have a larger amount of money you can apply towards a Home Equity Line of Credit or HELOC.  This money could be used for home renovations (some which may be tax deductible) or paying off other debts.  Know that lenders have tightened the reigns on equity lending policies since the housing bubble 15 years ago.  Most lenders will require you to maintain at least 20 percent of the equity in your home.

Do you currently have a mortgage?  Are you paying private mortgage insurance (PMI)?  Perhaps you can get rid of this extra payment you are making every month.  If you financed your home with a conventional loan, and originally put down less than 20 percent on the property when you purchased it, you may still be paying PMI.  If your home is now worth more, you may have enough equity to cancel the PMI.  You will need to have your home appraised, as that is the proof to the lender that your home has actually increased in value.  An appraisal costs around $500, and lenders have appraisal resources.

You should also check your property insurance coverages.  Do coverages match what your home is worth now?  A policy based on a lower priced home may not cover the current value of the home should anything happen to it.  An adequate home insurance policy will cover the cost to rebuild your home should something catastrophic happen to it.  Additional structures on your property, personal items, and liability coverages should be reviewed as well.  While you’re at it, check that auto insurance policy.  Maybe you’ve had changes to the amount or locations you are regularly driving to than you had in the past.

Now, unfortunately, property taxes are based on the value of your property.  When property values increase, your property taxes will increase as well.  The Maryland Department of Assessments and Taxation does provide tax relief programs that eligible homeowners may qualify for [see link below].

Generally, it’s a positive sign when home values increase in a neighborhood.  In addition to greater equity for current homeowners, people looking to sell a home can make a profit.  Most of all, it shows that our North Four Corners neighborhood is a place people want to be a part of and call home.

[Board member Dye lives on Lombardy Road.]   ■

Property Tax Assessment Article Maryland Department of Assessments and Taxation