How equity buyouts work in a divorce refinance

When a marriage ends and one spouse wants to keep the family home, they generally have to buy out the other’s share of it. For most couples, the home is their largest asset, which makes that buyout one of the biggest financial questions in the divorce. Divorce is common enough that this comes up constantly: Roughly a third of Americans who have ever married have been through one, and those divorcing now are older than in past decades. Close to 40% are 50 or older, up from 8% in 1990, and among people over 50 ending a first marriage, the marriage had lasted a median of 29 years. A marriage of that length usually rests on a home that has appreciated for decades, so the equity at stake can be substantial. Turning that equity into a payment the remaining spouse can finance is what an equity buyout, built into a refinance, is designed to do. Most couples own and finance the home together, so both names appear on the title and the mortgage. When they divorce, the decree specifies who keeps the house and what the departing spouse is owed for their share, and a refinance is how that gets paid. How the equity gets divided is the couple’s decision, reached on their own or through mediation, ...