What should you know about home equity?

On Behalf of | Dec 12, 2022 | Family Law

Asset division is an inevitable part of any divorce, which many couples look forward to the least for various reasons. Owning a home together and amassing equity there is a chief asset to handle, too.

Fortunately, there are several things a couple can do to make this process easier.

Determine the house value

Nerd Wallet discusses ways to split home value during a divorce. This starts with getting an appraisal of the property. This allows a couple to determine the current value of their house, which will let them know the proper worth they are dealing with.

After determining the value of the house, the couple can choose to handle it in a number of ways. This includes a buyout, or selling the house and splitting the profits, which are two of the most common and popular ways of dealing with the house.

Opting for a buyout

A buyout involves one party wanting to keep the house for whatever reason. They wish to stay on the property, refinance their mortgage and remove their partner’s name from official legal documents. To do so, they will pay their spouse for the spouse’s “share” of the house, thus taking the entire financial burden onto his or herself instead.

Selling the home

However, this is sometimes difficult on a one-person income. Another potential option instead is to sell the home and split the profits.

This is just what it says on the tin, involving the couple listing their home and splitting the profits of the sale equally between them. This allows each to find a new home without having the income needed to refinance on their current home, making it a good option to consider.