File A Homestead Declaration Today

Things happen. Businesses go bust. Sickness, divorce, whatever the issue, things happen that may result in large debt and an eventual attack on your home equity. It’s part of a business owner’s life, taking risk, winning and losing sometimes. When unexpected events occur, it is important to have prepared for these events in advance of such occurrences. While there is much advice and many strategies offered on how to deal with these issues both in this blog and elsewhere. The one point I want to get across here today is that there is a very simple way to protect a huge amount of your equity in your home with very little effort and a cost that is typically well under a hundred dollars. So many have not yet taken this step, thus I inform you about it and urge you all to act rapidly and do it.

It’s called a “Homestead”. It’s a statutory provision that all states have enacted to provide protection of one’s equity in their principle place of residence from creditors attempting to liquidate to satisfy a debt.

It’s simple, and here is how it works: File a Homestead Declaration Form. This is a very simple document that requires you knowing your address and the book and page the deed is located in the local Registry of Deeds. Your lawyer can find this out quickly and easily, or you can go to the local Registry of Deeds were your deed is filed and a clerk will assist you in finding out the information you need. It costs approximately $10.00 to file. You do not need a lawyer to accomplish this although most lawyers will gladly handle this for you at a very low cost.

Here is the good news–it protects $500,000 of equity in Massachusetts, and varying amounts elsewhere in the country. No one can penetrate this barrier, no one. Now please keep in mind it works only against debt acquired after you file, not debt acquired before you filed the homestead form. If you are refinancing your home or acquiring a new home with a new mortgage, the mortgage company will require you to either wait to file your homestead or remove your homestead until after they file and then refile your homestead so they can come before it and thus have full access to your equity in case of foreclosure.

That’s it, that’s all you have to do. You will sleep better and be very happy should the day ever come that you need such protection. Do it today. It’s inexpensive and it protects a huge amount of your equity so you can sleep better.