Homestead

Definition

Homestead in plain English

Homestead protection is a state law that acts like a safety bubble around the home you actually live in, so that if you fall deep into debt, certain people you owe can't force you to sell the house and can't grab all the value out of it. The idea is compassion: society doesn't want a family thrown onto the street over ordinary bills. Picture a video game where your home base is a 'safe zone' enemies can't fully raid — that's roughly what it does for a chunk of your home's equity (the part of the home's value you truly own, not the bank's). It doesn't cover everything — for example, the mortgage lender itself can still foreclose — but it shields a portion from general creditors.

Learn these first

• Assessed value
• Market value

Related National Real Estate Exam terms

• Bundle of rights
• Condominium
• Cooperative
• Dominant tenement
• Emblements
• Encroachment
• Estate
• Fee simple absolute
• Fee simple defeasible
• Fixture