What Is Homestead Protection?

If you are sued in court and lose, the person who sued you may try to force the sale of your home to collect their money. A homestead makes it harder for them to do this.

A homestead protects some of the equity in your home. If your home is worth more money than you owe on it, you have equity. For example, if your home is worth $350,000 and you owe $300,000, you have $50,000 in equity. A homestead can protect the $50,000.
There are two types of homesteads, automatic and declared.

What is an automatic homestead?
If you live in the home you own, you already have one. It protects some of your home equity until you sell your home. You do not have to sign or file anything to have an automatic homestead

What is a declared homestead?
A declared homestead is a legal form that you record with the Registrar-Recorder’s office. A declared homestead protects some of your equity for six months after you sell your home if the following three conditions are all true:

You sell your home and buy another home within six months;
The protected amount is used to buy another home;
You record a homestead on the new home.
Only the home you live in, qualifies for a homestead.

Who needs a declared homestead?
If you’ve been sued in court, lost, and have a large money judgment against you, a declared homestead can help. If you sell your home, it protects some of the proceeds for six months. This gives you time to buy another home and record another declared homestead.

How much does a homestead protect?
Both automatic and declared homesteads protect the same amounts:

$50,000 for an individual;
$75,000 if the homeowner lives with at least one family member who has no interest in the house;
$150,000 if the homeowner is 65 years of age or older, or is physically or mentally disabled;
$150,000 if the homeowner is 55 years of age or older and single with an annual income of $15,000 or less;
$150,000 for a married couple with a combined annual income of $20,000 or less;
A homestead does not protect you against:

Foreclosure of your home by mortgage lender if you are behind on payments.
The enforcement of a mechanic’s lien;
A judgment for child or spousal support.

How do I file a declared homestead?
You can file a declared homestead by taking these steps:

Buy a declared homestead form from a stationery store or search for a generic form online.
Fill out the form.
Sign the form and have it notarized.
Contact the Registrar-Recorder’s office where the property is located for fees and filing addresses.
Companies offering to help you file a declared homestead cannot charge more than $25.

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Private Mortgage Insurance

When you first buy a home, it can be very frustrating and
complicated but it can also be extremely exciting. There is
no feeling like being able to call a home your own and have
the freedom to decorate it and change it any way you want.

Do you want old wrecked cars on your lawn Go for it.
Finally build a duck pond of your own Sure, it’s YOUR
house and you can do what you want.

Unfortunately, life happens and sometimes you won’t quite
be able to make your loan payments all the time. This is
where private mortgage insurance comes in.

When you first buy your home, most lenders expect you to
pay a large down payment of at least 20 percent or get some
kind of insurance loan protection program that’s called
private mortgage insurance.

This insurance coverage will protect the lender just in
case you are ever unable to make your monthly payments.
This insurance doesn’t cover anything else though.

If your home catches fire or something, you better hope you
have some other types of insurance. This is only to cover
you if you fail to make your payments.

Even if you don’t need it, it doesn’t hurt to get private
mortgage insurance just in case. No job is 100 percent
reliable and if you have to relocate or change jobs, you
won’t have to worry about your house payment if you happen
to go a week or two without pay. It’s better to be safe
than sorry.

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