What happens to home equity when you divorce?

Most married couples find that their lives become heavily intertwined once they say, “I do,” but this also means you need to untangle your life from your former partner’s, should that marriage ultimately end in divorce. While you probably have all sorts of matters you need to work through and assets that need to undergo division, one of the most significant matters you may need to address is what you plan to do with any home equity you amassed while together.

For many people, their homes are their most valuable assets, so it makes sense that you would want to devote considerable attention to this aspect of property division. Looking at how others who have come before you chose to divide home equity can help you get a handle on how you might want to do it. Most former couples choose to follow one of three routes when dividing home equity. For example, you may decide to:

Sell the home and split the profits

If neither you or your ex have any desire to remain in the home you once shared, your best bet may be to put the house on the market and split any profits you make after the sale. Doing so gives you a chance to untangle your lives even further, and it can also help you get some money in your bank account you can use for a down payment or security deposit on a different property.

Have one party buy out the other

If one of you wants to stay in the home and the other does not, consider having the party looking to stay refinance the mortgage to remove the other party.

Both remain in the home temporarily

If you and your ex’s split was not a particularly nasty one and the housing market in your area is not especially favorable, you may want to both stay in the home temporarily while you await a change in market conditions.

While most people splitting from their spouses choose to split home equity using one of these methods, these are not necessarily the only options you may have available to you.

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