What happens to home equity when you divorce?

On Behalf of Sanchez Burke, LLC

When you and your one-time partner own a Louisiana home together and make the decision to split, part of the process involves figuring out what to do with any home equity you have. For many couples splitting up, the shared home is among their most valuable assets, so figuring out how to divide its equity is often one of the most important steps in asset division. 

What options do you and your ex have when it comes to dividing up any equity you amassed during your marriage? 

Selling the home and splitting the proceeds

Unless you or your former partner has a strong urge to stay in the home or you stand to lose a considerable sum in selling it, consider putting the home on the market. When it sells, you may each take your share of the profits and use it to rent or purchase another place to live while making a clean break from one another. 

Refinancing the mortgage to exclude one of you

If you or your ex wants to keep the home while the other party vacates it, you may be able to accomplish this by refinancing. Getting a new mortgage in the name of the party who wishes to stay should pay off any outstanding debt and instead roll whatever remains into a new mortgage. 

In some cases, you may want to consider alternatives, such as bird-nesting, which involves you and your ex taking turns staying in the family home while the other party sleeps elsewhere. However, most former couples choose to split their home equity using one of the above methods. 

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