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How to divide equity in a house during a divorce

With the increasing cost of housing, many intact couples do not find they have a ton of money left over after paying their mortgage as well as their basic living expenses. When those same couples split up, however, they may be left with less money than is necessary to meet those expenses.

Consider selling
While the real estate market is not great right now (2014) for sellers, if the mortgage is otherwise eating you alive, you may have no choice but to sell. Couples often budget a mortgage factored on two incomes coming into 1 household. When the couple goes through a divorce, now they are left with trying to support 2 households - meaning 2 sets of utility bills as well as both payment of the mortgage & payment of rent for one of the parties who's moved out. It's not uncommon for this to leave the parties at the break-even point, or even leave them with less money than is needed to pay all their basic expenses. If this is the case, then the best option is to immediately put the house on the market & salvage what you can of the equity.

Get a Co-Signor
The other option - if one party wishes to keep the house but the parties cannot afford to fund 2 households - is for the party wishing to keep the house to get a co-signor on the mortgage. That way, the party giving up his/her rights can get a buy-out from the refinance & go on with his/her life. Making these decisions sooner rather than later in the divorce process will save on attorney's fees as well as preserve equity you've worked so hard to build up in the house.

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