When you divide property in a divorce, a costly home or other major asset may seem worth keeping. But its price does not show how much value you would actually receive. A large mortgage or other loan can reduce that amount and make the property harder to afford after your divorce.
New Jersey law tells courts to consider the value of marital property along with the debts and liabilities of both spouses. For you, that means it helps to look beyond the price and focus on how much value remains after the debt.
Look at the equity first
Equity is the amount left after you subtract what you owe from an asset’s value. If your home is worth $1.2 million and you owe $800,000 on the mortgage, you have $400,000 in equity before other costs.
That amount may give you a better basis for comparing the home with other property. An asset with a higher price could still have less equity if it carries a larger debt. This distinction matters when you decide what property makes sense for you to keep.
Check who still owes the loan
The value you own is only part of the issue. You also have to look at who remains responsible for the loan. If you keep the property, you might continue making the payments that come with it.
Your divorce terms do not automatically change your agreement with the lender. If your name remains on a joint loan, the lender could still seek payment from you even if your former spouse agrees to pay the debt.
You may want to review the loan terms before agreeing on who keeps the property. Depending on your finances and the lender’s rules, refinancing or selling the asset might provide another option.
Look at what keeping the asset means for you
A valuable asset may not work well for you if its debt makes the payments hard to manage. As you sort through complex marital property issues, it can help to compare the equity with the amount you still owe. You could also review recent loan statements so you know the current balance before discussing how to divide the property.