When can you use existing real estate as collateral to buy?

This is achieved by the value of the property going up in value and the mortgage principle being reduced by your mortgage payments.

What happens if you file a declaration of Homestead?

Filing a Declaration of Homestead does not provide blanket protection of the home or property against all debts. For example, if the homeowner uses the home’s value as collateral for a secured loan, the lender can seize the home if the borrower defaults.

Can a creditor force the sale of a homestead in California?

The California homestead does not guarantee you that a creditor can’t force a sale of your home to pay a debt. Instead, it guarantees that you get the dollar value of your homestead from the forced sale of your home before the creditor forcing the sale gets any money. More about the limitations on homestead protection.

How does the homestead tax credit help you?

The tax credit assists the homeowner by reducing the amount of property tax owed each year. In most jurisdictions, the amount of the homestead tax credit is based on the amount of property taxes and the household’s total resources, but the laws vary by state.

What are the problems with Homestead home equity?

On the other hand, homestead does not include investment property. One of the problems with the home equity provision is that you can’t take additional collateral. It is possible that the title company is concerned that the property would include “additional collateral” in the form of business fixtures, etc.

Can a debt be honored with a declaration of Homestead?

Furthermore, some kinds of debts must be honored with or without a Declaration of Homestead: If you’ve put your property up as collateral on a loan, for example, the homestead exemption does not apply. Other debts not covered include property taxes and special assessments.