Information on Divorce & Refinancing Your House

Apportion the equity in the marital home through a written agreement or a refinance.

Divorcing couples must divide debts and assets prior to obtaining their divorce decree. Often, one spouse remains in the marital home and refinances the home to buy out the other spouse.

Significance

If the marital home has an outstanding mortgage balance, then the spouse who remains in the home must "pay off" the spouse that moves out.

Features

Title is transferred to the spouse who buys out the other spouse, and the mortgage is assumed through a refinance.

Considerations

Prior to refinancing, most lenders require that the house be reappraised to determine its fair market value at the time of the separation or divorce. Using an impartial and experienced appraiser to determine the current market value is imperative.

Size

Typically, courts split the appreciation amount and the remaining mortgage debt. One spouse will have to refinance the house in order to pay the other spouse 50 percent of the equity.

Expert Insight

Divorce proceedings and resulting property allocations depend upon the specific jurisdiction's divorce laws. Depending upon the state's divorce laws and whether the divorce occurs in an equitable distribution versus a community property state, the home's equity may not be split equally. Courts may also consider other factors when allocating property, such as the duration of the marriage, the education and career opportunities each spouse possesses, and children's custodial arrangements.

The above information should not be used as a substitute for legal advice from a licensed attorney in your state.

References

• Divorce Source: Mortgage Issues--Refinancing in Divorce

Resources

• Nolo: Dividing Property and Debt During Divorce