If you’re going through a divorce, you may decide that you don’t actually want to sell your house. You’d like to keep it and continue living there.
Your spouse agrees, as long as you will trade other assets of similar value for it, like investments. They still want it valued the same as if you had sold it to a third party and divided your earnings.
Even if you do that, however, don’t assume that the house is now suddenly yours. It may still be in both of your names and you may still both be on the mortgage, if you have one. If so, you’ll probably need to refinance your mortgage to get it in your name only.
Why is this necessary?
The issue here is just one of liability for future payments. As long as you’re both on the paperwork, you’re both responsible. You may fully intend to make those payments without ever involving your ex, but falling behind would mean that they are liable for payments on your home. They will want you to refinance so that they are cut out of the equation.
Refinancing can also be helpful in the future. Say that you decide to move five years from now, and it’s time to sell that house. If you still own it jointly with your ex, things get very complicated. But if you have refinanced and you own it outright, then you can just sell it and keep the proceeds for yourself.
Dividing assets gets complex during divorce, especially with real estate and other big-ticket items. This is just one reason why it’s crucial to have experienced legal guidance.