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Homestead question
Posted on 5/12/20 at 3:58 pm
Posted on 5/12/20 at 3:58 pm
Say I have my primary residence and do not owe much left on that mortgage.
In addition, I’ve bought a good bit of land and built a cabin on it an hour or so away. I’ve taken a loan from the bank for the land and for the cabin to be constructed and since it’s not my “primary residence” the interest rates are not quite as competitive as a conventional mortgage.
Could I pay off my primary mortgage and just switch homestead to the cabin? Then refinance the cabin as a primary residence and get the more attractive rates?
Is it as simple as that or am I missing something?
In addition, I’ve bought a good bit of land and built a cabin on it an hour or so away. I’ve taken a loan from the bank for the land and for the cabin to be constructed and since it’s not my “primary residence” the interest rates are not quite as competitive as a conventional mortgage.
Could I pay off my primary mortgage and just switch homestead to the cabin? Then refinance the cabin as a primary residence and get the more attractive rates?
Is it as simple as that or am I missing something?
6
Posted on 5/12/20 at 4:19 pm to Shepherd88
Are you going to actually use your cabin as your primary residence...?
Posted on 5/12/20 at 4:42 pm to OleVaught14
It’ll likely be 50/50. Will still maintain employment in town with original house but do plan to retire to cabin in next few years.
Posted on 5/13/20 at 8:18 am to Shepherd88
Like OV14 mentioned, you would need to live there the majority of the time to claim it as a primary residence, but I think you knew that already.
You can do a lot of things, but that doesn’t make it right.
If you are going to retire in a few years anyway, why not use the equity proceeds from the sale of your current primary home to pay off / down your new primary home (the land and cabin)?
Good luck.
You can do a lot of things, but that doesn’t make it right.
If you are going to retire in a few years anyway, why not use the equity proceeds from the sale of your current primary home to pay off / down your new primary home (the land and cabin)?
Good luck.
Posted on 5/13/20 at 8:41 am to Shepherd88
(no message)
This post was edited on 1/11/21 at 1:58 pm
Posted on 5/13/20 at 9:16 am to Shepherd88
What state is your cabin in? If near a Rocky Mountain, I may lend my services to check in on said cabin when you are not there. Let me know.
Posted on 5/13/20 at 9:21 am to Shepherd88
confused by your use of “homestead”.
if you are in a state with a homestead exemption that affects property taxes not your mortgage interest rate. If by homestead you mean your primary residence (and thus a lower mortgage interest rate) there’s nothing stopping you from changing your primary address to the cabin, but that may affect your homeowners insurance at your main house
if you are in a state with a homestead exemption that affects property taxes not your mortgage interest rate. If by homestead you mean your primary residence (and thus a lower mortgage interest rate) there’s nothing stopping you from changing your primary address to the cabin, but that may affect your homeowners insurance at your main house
Posted on 5/13/20 at 9:30 am to cgrand
quote:
confused by your use of “homestead”.
if you are in a state with a homestead exemption that affects property taxes not your mortgage interest rate. If by homestead you mean your primary residence (and thus a lower mortgage interest rate) there’s nothing stopping you from changing your primary address to the cabin, but that may affect your homeowners insurance at your main house
This is what I meant. Thank you. This is in Mississippi to the other poster who asked.
Posted on 5/13/20 at 9:34 am to Shepherd88
Homestead laws/rules depend on the state. Your homestead is where you permanently reside. If you switch homestead, you could a) lose creditor protection for your main residence, and/or b) lose significant tax benefits for your actual primary residence
And there's always c) you get caught and get hit with pretty serious county fines
And there's always c) you get caught and get hit with pretty serious county fines
This post was edited on 5/13/20 at 9:35 am
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