On the Beat 2/20/20 - JTS & Co. Mortgage Professionals on Homestead Exemptions

Jeff Farnham from JTS & Co.

Mortgage Professionals joins Troy Thompson to talk about homestead exemptions.

Troy: welcome to on the beat, everyone.

I'm troy thompson.

Joining me in the studio today is jeff farnham with jts and company, mortgage professionals.

And today we're talking all about homestead exemptions.

Welcome to the show, my friend.

We're here to educate our audience, but i don't even know what we're about to talk about with homestead exemptions.

Explain to me and our audience of, well- jeff farnham: so homestead exemption, it's a tax incentive for homeowners that... essentially what happens if, let's just say you own a $150,000 home and the taxes are $1,500 a year without homestead exemption.

That's just assessed taxes on the property.

Homestead exemption gives you approximately a 50% tax incentive, so it'll cut those taxes in half.

So in mississippi, and most states have some something very similar.

You can file for homestead exemption on one property as your primary residence, whichever one you designate and that'll cut the tax bill in half for you.

So it's a way of encouraging home ownership.

Troy: is this widely known?

Yeah, i mean the first i've ever heard this.

Jeff farnham: i mean most people that are homeowners or who have been homeowners know about it and new people coming in, young people starting out just buying their first home, aren't really aware of it, but that's where their realtor comes in and helps explain it as an incentive to buy the home.

It's just another way of encouraging home ownership.

Troy: now you saying that, it's going every my mind, is this going to affect my monthly mortgage payments?

Jeff farnham: yeah, absolutely could.

So here's the deal.

When you buy the home and you close on it, depending on what time of year you close, you're going to get the benefit of whatever the current tax incentive is, whether it has homestead exemption on it, whether it doesn't, does it have an over 65 exemption for someone that's over 65?

So if i buy a home today that they're over 65, i'm going to have that tax estimate applied to my mortgage payment.

Jeff farnham: but next year, if i don't go file for homestead exemption, my payment's going to go up because their exemption is going to be removed and then the county is going to put the full taxes back on it, so as a homeowner, i have to go in january and february of the year following my close, file for homestead exemption.

And i'll do that one time.

Unless i remove it, it'll stay on there as long as i own the home.

Troy: where do i get to file for this?

Jeff farnham: you're going down to the tax office and there's paperwork.

It's not hard.

It's an easy process.

There's just a time period in which you have to do that, usually the first two months of the year.

You get to march to get it accomplished.

Troy: all right.

What do i need to take with me?

The mortgage papers or- jeff farnham: identifications, take your mortgage paperwork where you closed on the house, what's called your settlement statement, your warranty deed, those things, and they'll go in and fill out a form.

Takes probably 10 minutes or less to get it done.

Troy: okay.

You just said to me that once you do this, you don't need to do it every year?

Jeff farnham: no.

Troy: while you own and live in that property.

Jeff farnham: correct.

So once you filed for it, unless you change the classification or you sell the home or something like that, it's done on that property.

If i bought another home and let's say that the taxes on it are greater and i want to designate it as my primary residence, then you'd have to get on to the tax office to figure out what's the best way to do that.

Troy: this is information that will end up saving people a lot of money.

Jeff farnham: yeah, absolutely.

And sometimes you buy a home, there's no homestead exemption applied to it.

So you definitely want to go and apply for it next year because when you do, your payment's going to adjust because your total payment is made up of your principle and interest to repay the loan, 1/12th of insurance, 1/12th of taxes.

So if the taxes are $1,500 a year with no homestead, that's $125 a month.

So if i can cut that down, file for homestead and let's just easy math.

Let's say it cuts it in half and that's going to drop my payment by about $62.

Troy: okay.

Remind me when is the right time to be doing this?

Jeff farnham: the time to file is in january through 1st of march is the time to go do that.

So you're going down to the courthouse and take care of it.

Troy: okay, so the same year or what happens if i buy the home in july?

I have to wait?

Jeff farnham: you'll wait till january.

Troy: and then it's backtracked?

Jeff farnham: correct.

No, what will happen is because when you close in july, whatever the tax classification is on it, that's going to be applied through the remainder of the year.

But then you go and file in january of the next year.

Troy: brilliant.

Jeff farnham: so we send out a notification.

We remind people to go do that to make sure- troy: you do that?

Your office?

Jeff farnham: absolutely.

Troy: we're going to start doing it all through you.

Jeff farnham: we do it for our customers... troy: exactly, exactly.

Jeff farnham: because it's an important thing.

You need to make sure that's correct.

Troy: we appreciate you.

Always get information.

If you want to find out more information, there it all is up on the screen for you.

Listen, you need to go and see jeff and his entire team.

They'll put you on the right track.