How to Figure Home Equity in a Divorce

By Beverly Bird

Equity in assets is a crucial part of property division in a divorce and the marital home is often a couple's most valuable asset. Most state laws require a home's equity to be determined by appraisal as part of the divorce process. It's important to identify equity because each spouse is entitled to a share of it as part of property division.

Equity in assets is a crucial part of property division in a divorce and the marital home is often a couple's most valuable asset. Most state laws require a home's equity to be determined by appraisal as part of the divorce process. It's important to identify equity because each spouse is entitled to a share of it as part of property division.

Step 1

Select a licensed real estate appraiser who has experience appraising homes for divorces. You and your spouse can use one appraiser and split the cost, or each of you may hire your own and get two appraisals. Although it may be tempting to just use your home's tax-assessed value or have a real estate agent do a comparative market analysis, these choices won't hold up well in court if you and your spouse end up disputing the value of your home at trial. What's more, comparative market analyses often come in high -- and in many areas, tax-assessed values have little relation to market value.

Divorce is never easy, but we can help. Learn More

Step 2

Determine the extent of all liens against your property. This might include the mortgage, home equity loan or other lines of credit secured by your home. It might be worth it to have a title search done as well. There may be liens against your property you don't even know about, for example, if someone got a judgment against you. When you've gathered documentation confirming the balances of all liens, add them up.

Step 3

Subtract total liens from the appraised value of your home. This is your equity, and you have a few options for dividing it if one of you is going to retain the home. You can refinance the mortgage for enough money to satisfy the existing mortgage plus half of the equity, so you can pay off your spouse's interest. You could also offset your spouse's share of the equity by relinquishing to him other marital assets of comparable value, or the two of you might agree that you'll make a cash payment to him over time.

Divorce is never easy, but we can help. Learn More
How Is a Division of Property Figured in a Divorce Where a Home Has a Negative Equity?

References

Related articles

What Happens in an Equity Buyout in a Divorce?

Particularly after a lengthy marriage, it's likely that spouses have built up some equity in their assets. With every mortgage or loan payment, they own more and more of the property, and the lender owns less. This equity is a marital asset, and when a couple divorces, each spouse is entitled to a portion of its value. An equity buyout occurs when one spouse keeps the asset and, in exchange, compensates the other for her share of the equity.

Divorce & Real Property

Owning real property can sometimes make for a heated divorce because so much money is at stake. Real estate usually has some significant value -- more than your automobiles or sometimes even retirement plans. To further complicate things, it's often encumbered by mortgage liens as well. Whether spouses are trying to negotiate a marital settlement agreement or the court is ordering a solution at trial, several issues must be considered when making a distribution of marital property.

House Appraisal & Divorce

Other than child custody, one of the most hotly contested issues in a divorce is often disposition of the marital home. In addition to your emotional investment in the property, you and your spouse have probably spent years paying for it. You must make a choice between selling it, or deciding that one of you will keep it. A fluctuating real estate market can make the decision even more difficult.

Get Divorced Online

Related articles

Options for Couples Divorcing & Selling a House

In a perfect world, you’d be able to time your divorce to get the most out of your real estate investment. In ...

Cash-Out Refinance Explanation for a Divorce

When you’re in the middle of a divorce, it’s human nature to try to avoid additional, traumatic change. ...

How to Handle Your House in a Divorce

Even more than pensions and other retirement accounts, a couple’s home is usually the most significant and ...

Best Ways to Sort Finances When Getting Divorced

If you know your marriage is ending, you and your spouse always have the option of resolving things on your own terms, ...

Browse by category