What happens to home equity when you divorce?

If you and your spouse share a Missouri home and the two of you are planning to divorce, you may have valid concerns about what will happen to any equity you have managed to build in your home over time. In most cases, you have three main options once you reach this point in your life, and it is up to you and your soon-to-be-former partner to determine which one might best fit your needs.

Per Nerdwallet, the first thing you must do if you are trying to divide equity in your home is determine just how much your home is worth in the first place. You may want to consider having you and your current spouse order your own appraisals to determine home value, as this can help ensure accuracy while helping prevent potential disputes between the two of you down the line. Once you have a clear picture of what your home is worth in the current market, you can figure out exactly how much equity you have in it.

Once the two of you agree on the value and amount of equity that exists in your home, you can devote proper attention to your options. In many cases, divorcing couples simply decide to sell the family home and split the profits between them. This is arguably the easiest way to split home equity, and it also makes sense for divorcing couples who are in search of a fresh start.

Another possible way of splitting equity involves having one party in the marriage stay in the home and refinance the mortgage to exclude the other party. That way, the person who stays can buy out the party who leaves. Finally, a third, less-common option involves having both parties keep the home. If finances allow, the parents may move in and out frequently for the benefit of any shared children, or the divorcing parties may also choose to hang on to the home and live together if they do not have any more favorable financial options at their disposal.

This information about splitting home equity is informative in nature, but it is not a replacement for legal advice.



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