Understanding the Vocab- Declaration of Homestead

At each purchase closing in which our office represents the buyers, we encourage our clients to execute a Declaration of Homestead.

At each purchase closing in which our office represents the buyers, we encourage our clients to execute a Declaration of Homestead.

Declaration of Homestead – A formal, written, recorded assertion by an owner that the dwelling in which he or she resides is exempt from forced sale. (http://www.fntic.com/escrowterms.aspx?letter=D)

In the Commonwealth of Massachusetts, the Homestead Act automatically protects a person’s primary residence from attachment, seizure, execution on judgment, levy or sale for the payment of debts up to $125,000.00.  By signing and recording a Declaration of Homestead, that amount is increased to $500,000.00.

Other benefits of a Declaration of Homestead include extending benefits to a non-owner spouse or a new spouse if the owner was unmarried at the time of purchase, extending benefits to beneficiaries of a trust-owner, and that the protection cannot be subordinated to an unsecured debt (ex: credit card balances and student loans).

This can only be recorded for a primary residence (where you live more than 50% of the time) and is not the same as home insurance.

For more details and frequently asked questions, please visit the Secretary of State’s website at https://www.sec.state.ma.us/rod/rodhom/Homestead_q_and_a.pdf

If you are unsure if a Declaration of Homestead was recorded for your primary residence, you can check online on your county’s Registry of Deeds website or contact our office and we would be happy to help!

Understanding the Vocabulary

As certain terms and phrases are taken for granted in our industry and not obvious to first-time homebuyers or to anyone who has not been involved in a real estate transaction for a while, we at  Marino & Marino want to share definitions, descriptions, and real-life examples to help clarify and simplify the process.  Each week we will discuss a topic based on questions we are frequently asked at the closing table and throughout transactions.  To begin:

Private Mortgage Insurance (PMI) — Insurance against a loss by a lender in the event of default by a borrower (mortgagor). The insurance is similar to insurance by a governmental agency such as FHA, except that a private insurance company issues it. The premium is paid by the borrower and is included in the mortgage payment. (http://www.fntic.com/escrowterms.aspx?letter=P)

PMI is typically required for loans where the borrowers cannot make a full 20% down payment.  The cost of the premium varies dependent on a few factors and is generally paid in installments as part of the monthly mortgage payment.

The benefit of loan products that offer less than 20% down payment (but include PMI payment) is that they allow buyers to purchase a home with sometimes a significantly smaller down payment giving them more home options and flexibility.  As the equity grows in their home, buyers are given the opportunity to remove the PMI payment.

Once the principal balance of the loan reaches 80% or less of the value of the property, the borrowers can initiate the processes of removing the PMI portion of payment from their monthly mortgage payment.

If you are currently paying PMI, contact us today to review your options.

Check back next week for more real estate terms and examples!

Massachusetts ZIP codes top Realtor.com’s list

Realtor.com ranked our neighboring city of Medford (02155) #4 on their list of Top 10 Hottest ZIP codes of 2017!  Factors used in the determination of ZIP codes all over the country include property affordability, millennial population and ownership rates, resident salaries, and city job markets.  This certainly matches what we are seeing as our office represented parties in more than 20 transactions in Medford in 2017.

Melrose (02176) is also a Realtor.com hot ZIP code and is currently ranked #4 for the first quarter this year.  It will be interesting to see where Melrose ranks at the end of 2018!

For the complete article and to see what other ZIP codes made the list, visit https://www.realtor.com/research/hottest-zip-codes-2017/ .

More changes ahead in the closing process when you Buy/Sell or Refinance your HOME!

In effort for Buyers and Owners to better understand the terms of the loan product they are purchasing from their lender, NEW regulations are around the corner and will be implemented starting August 1, 2015.  The main idea is to give the consumer more time to review the terms associated with the loan product they are purchasing…but will this cause delays in the closing date and cause problems until all parties truly understand the process????

For more information see this Article from The Washington Post

Do you need Title Insurance when you buy a home?

One common question that clients, who are in the purchase and sale process, ask is about whether they need title insurance.  Although every real estate deal is different, what is constant is the need for protection.

Both residential and commercial deals can become complicated and what title insurance ensures is that you have protection from the possibility that the seller doesn’t, or the previous seller didn’t have free and clear ownership of the house and property that you are purchasing.

To learn more about what the benefits of coverage along with how title insurance protects you check out this helpful article from NOLO.

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Email: gerard@marinolawyers.com for help with your legal needs.