Divorce and dividing the equity in the marital residence

  Posted on March 3, 2022
divorce house equity calculation

During a divorce, the marital residence is often the largest asset to be divided and so it is important to spend time confirming the numbers and understanding the details.  The equity calculation for the residence requires the spouses agree on the value of the property.  The value can be determined by an appraisal of the house and or realtor comps.  The spouse keeping the hosue may benefit from having the house being inspected so they know any potential repairs to be completed.  Costs for these repairs can be deducted from the house equity value.  Realtor fees, closing costs and refinance fees can also be deducted from the house value to determine the final equity payment from one spouse to the other.

If the house mortgage will be refinanced into only one spouse's name (the spouse keeping the property), the refinance process will typically include the spouse who is being taken off the mortgage to sign a disclosure form acknowledging they understand their spouse is refinancing the mortgage.  If the refinance includes a cash out (cash paid to the spouse not keeping the house for their share of the house equity), it takes three days from the signing of the refinance for the funds to be paid.

The refinance also typically includes changing the title of the property from being jointly titled to being titled in the name of the spouse who will be keeping the house.  A document called a quit claim transfers the title from being titled jointly to being titled in the name of the spouse keeping the house.

While it may seem a bit overwhelming, the process of calculating the house equity, refinancing the mortgage and changing the title is very straight forward.  We take pride in our ability to help clients navigate the unfamiliar waters of a divorce settement.

Posted in: Finances