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What happens to home equity when you divorce?

Divorce in California, in its simplest terms, involves untangling your personal, professional and financial life from that of your ex, and there are certain key matters you will typically need to work through as you navigate the process. If you and your former spouse purchased real estate together, one such matter you will need to work through involves how you plan to divide any equity you have in your shared home.

According to NerdWallet, most divorcing couples figuring out what to do with shared home equity choose to take one of three paths. In the first, and arguably easiest, scenario, you and your ex can simply list your home for sale, and once it sells, you can split any proceeds you make on it between you. That way, you can each have a little nest egg to utilize as you embark on life without one another.

In other situations, though, you, or conversely, your former spouse, may wish to keep the home you once shared. In this type of situation, your best bet may be to refinance the mortgage you have on the home to list only the person who wants to keep it. The person who wishes to remain in the home, then, can use his or her equity in it to buy out the other.

Sometimes, whether due to unfavorable housing market conditions or what have you, the time is not quite right to sell the home. If the relationship between you and your ex is still an amicable one, you may choose to both stay in the house until the housing market improves. Or, if finances allow, the two of you may take turns living in the once-shared house until you are able to sell it for a reasonable price.

This information about dividing home equity amid divorce is educational in nature and does not constitute legal advice.

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