Equity in the House

The equity in your house is the value minus the debt. If you have had the house appraised, that is the value. The debt is the outstanding balance on your mortgage(s).

In a divorce, the amount to be divided is the equity amount. However, the equity amount does not take into consideration the selling costs or the fix-up costs. So, when you are trying to calculate how much money you can have after the house is sold, you need to take the value and subtract from that the debt, the fix-up costs and the selling costs.

If you call your mortgage lender to ask about the outstanding balance on the debt, you can get two numbers. One is the principal amount outstanding and the other is the payoff amount. The former includes any interest due. If you are current on your payments, just use the principal amount. It is simpler. Keep in mind that every day the payoff amount will change due to the interest on the loan. And every time you make a loan payment, both the principal outstanding and the payoff amounts will change.

Check for liens on the property. You can have tax liens or mechanic’s liens on your property without your knowledge. To find out about liens, you can hire a title company to do a search or you can go to your county records office where your deed is recorded.