How to Pay Home Equity to My Divorced Spouse

You and your ex-spouse can divide your home's value between yourselves.

You're divorced and while both you and your spouse own your marital home, someone has to go. The property settlement decisions made during your divorce can result in your having to pay your ex-spouse some or all of your marital home's equity. The approach you take to getting the equity to your ex-spouse will depend on whether you're staying in the home.

Instructions

1. Decide whether you want or have the capacity to stay in the house. Your house may hold memories you want to forget. If so, you may want to consider selling the house. Additionally, staying in the house may not be an option for you or your ex-spouse since you may be required to maintain the mortgage with one income instead of two.

2. Find a real estate agent. If you decide not to keep the house, you can get the equity to your spouse by selling the home and writing him a check for the sales proceeds. Selling the house involves certain expenses that may reduce the amount of equity your ex receives. If you use a real estate agent, she will expect a commission. The commission is generally a percentage of the sales price.

3. Visit your bank. If you decide to keep the house, another way to access your home's equity is to refinance it. A refinance involves going through the home financing process again. You can end up with entirely new loan terms at the end. You also can pull cash from your home's equity. You'll need to make sure your credit is sufficient to qualify for a mortgage. You must also provide proof that you have sufficient cash flow to keep up the payments. Your pay stubs, W-2s and bank statements should be sufficient proof.

4. Hire an appraiser. Regardless of what you decide, you'll need to know your house's value to determine how much equity your ex is due. If you sell the house, getting an appraisal can help you set a fair selling price. It will also help if your ex accuses you of under-valuing the house during the sales process. If you keep the house and refinance, you need the home appraisal to let the bank know your home's market value.

Tips & Warnings

• Consult a licensed attorney in your state for legal advice about the best course of action.

References

• Bank of America: Getting a Refinance Loan
• Wells Fargo: Costs of Selling Your Home