Law Offices of Barry I. Finkel, P.A.
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What happens to home equity when you divorce?

Even if your divorce is relatively amicable in nature, you and your former partner will still need to work through certain matters before you can make a clean break from one another and move forward with your own separate lives. One such matter involves dividing up your shared assets. If you are like many people going through a divorce, one of your most significant shared assets may be your home.

To find out how much equity you have to divide, the first thing you need to do is schedule an appraisal. In many instances, both parties going through the divorce will get appraisals, because this can give you a better sense of the true, accurate amount of equity you have in your shared home. Once you have this figure, you can determine what to do with it. Most people in your shoes pursue one of three options.

Option 1: Sell the house, split the profits

By selling the home and splitting the profits down the middle, you can get a clean break from your former spouse. You can also get a bit of a nest egg that may come in handy once you start looking for a new place to call home.

Option 2: Have your spouse refinance the mortgage, or vice versa

If one of you wishes to keep the home you once shared, you may be able to accomplish this by having the party who wants to keep it refinance the mortgage to eliminate the other’s name. In doing so, the person staying will have to take out a new loan in his or her name only to replace the original loan.

Option 3: Wait for conditions to improve

If you are facing a particularly bad housing market, you may want to consider keeping the home until market conditions improve enough for a favorable sale. Similarly, if you have a child getting ready to move out on his or her own, you may want to stay in the home together for the time being until this occurs.

While these are not necessarily the only options available to you as far as splitting up home equity, most divorcing parties choose to use one of these three methods to do so.

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