Owning a home requires good financial sense. There are a lot of financial matters you must understand in homeownership, from mortgages to property taxes. Another critical detail to understand – especially in the event of a divorce – is your home’s equity.
What exactly is home equity?
As a homeowner, you are likely familiar with the concept of home equity. However, it is critical to understand the details. Kiplinger puts it quite simply: home equity is the difference between the market value of your home and what you owe on your home, such as the remaining mortgage balance. It is important for homeowners to understand the true value of their home as it pertains to them, but it is even more critical to know the home’s equity in the event of a divorce.
Why is this figure key in a divorce?
When you seek a divorce, you and your ex-spouse must divide your marital property under North Carolina law. Dividing your family home is often a complex matter, as there is a lot of emotional financial value wrapped up in it. However, in terms of property division, you and your ex-spouse will divide the value of your home – or your home’s equity.
Of course, there are many other factors that will come into play, such as:
- If one spouse will keep the home or spouses agree to sell it
- Both spouses’ contributions impacting the home’s value
- Other factors affecting the equitable distribution of the home’s value
- Additional fees, loans or finances related to homeownership
Even so, determining the accurate value of your home’s equity is essential. This will be the foundational detail to consider when dividing your family home in the process of dividing your property.
As previously stated, the family home can be one of the most challenging assets to address in your divorce. Obtaining professional financial and legal guidance can help you overcome these challenges and protect your financial health.