I am so excited to continue our new blog series “Closing Explained.” This blog kicks off part two of the series, and this week we will be discussing what it means to homestead your property which is commonly referred to as “Homesteading.” The term, Homesteading, is unfamiliar to those not in the real estate industry, and that is completely okay! That’s why we’re here, to help explain these things. I can tell you that it does not mean we are riding a horse and buggy out to the back forty acres (heehee).
Now, you may be wondering, what is homesteading? Why do I need to do it? Why should I care? Well, to explain, let’s start with the basics. The term “homestead” is defined as, “a person’s or family’s residence, which comprises the land, house, and outbuildings, and in most states, is exempt from forced sale for collection of debt.” Translation: protection against lawsuits.
To put it simply, to declare a property homestead, either you or a family member must use your property as a primary residence. When title is transferred after closing, the county will imply a non-homestead status for the real estate until they receive and process the new owner’s homesteading application.
In Minnesota, we have a “homestead program.” This program allows residents to be a part of the Homestead Market Value Exclusion. This exclusion has two major benefits to the homeowner. First, your property’s taxes may be reduced due to a homestead tax credit depending on the market value. Secondly, being a part of this program allows homeowners to receive their Minnesota Property Tax Refund. These are two benefits, that we at TitleSmart make sure our clients are aware of.
Amongst the multitudes of paperwork buyers receive at closing, homesteading instructions are part of the after closing “to do” list. We understand how difficult it can be to keep everything straight. Because homesteading is so important, we do a little extra by providing our customers with neon-colored homesteading instructions. We want to ensure our clients won’t lose these very important instructions with all the piles of paperwork they have received!
Here at TitleSmart, it truly is the little things that make the BIG difference! I hope you enjoyed Part 2 of our “Closing Explained” series, and look forward to our next one together. Stay tuned!