Splitting equity when you give your spouse the home in a divorce

On Behalf of | Feb 6, 2022 | Divorce, Mediation

The family house is often the most significant asset a couple splits in a divorce.

When you agree to let your spouse have the home, you may worry about getting your half of the equity.  Fortunately, there are several different ways to collect your portion of the investment.

Know what your home is worth

In California, half of the equity in the house is yours. To determine what this amount is, you must know the current value of your property and the remaining balance of your mortgage. Some ways to calculate your home’s worth are:

  • A comparative market analysis completed by your realtor
  • An appraisal by a professional real estate appraiser
  • A broker price opinion
  • Local property tax assessments

Once you both agree on the property’s value, subtract your mortgage payoff to calculate the total equity.

Options for getting your share of the equity

Since your spouse is staying in the residence, the easiest way to get your payout is for them to apply for a cash-out refinance on the property. This step removes your name from the mortgage, and you get a check for your half of the equity at closing. If your spouse does not qualify to refinance the loan, other payment arrangements include:

  • A home equity loan or line of credit
  • Cash from their separate savings account, retirement fund or from their family members
  • Giving you other marital assets that equal your half

When you agree to let your spouse stay in the house after the dissolution of your marriage, consider various options for recovering your share of the equity.