Question: My wife and I are in the middle of divorce proceedings and are now dividing up our joint assets. Instead of selling our home, she has agreed to let me keep it as long as I can refinance the mortgage to remove her name and pay her half the equity in cash.

The problem is that we can't agree on what value to put on the property in order to determine the equity in the home. She thinks the property is worth over $310,000 and I believe it's not worth more that $275,000. Our current mortgage balance is only $140,000. We don't know any appraisers and I frankly am worried that if we had the property appraised one of us would object to the outcome. Do you have any suggestions?

Answer: Being a mortgage broker, I have encountered this problem many times before. Here's a practical approach to run past your attorney(s).

First, identify two independent licensed property appraisers. Call the mortgage broker or real estate agent who helped you purchase the home and he or she will be glad to give you a couple of names. Explain the situation to the appraisers and tell them each that you want a fair market value of the home. A good appraiser should be able to determine a reasonable value without being influenced by an affiliated party who is looking for a specific number.

If you and your wife can agree on two appraisers, let them do the job and present you with two appraisal reports. Let's say, hypothetically, that the first appraiser values the property at $280,000 and the second appraiser thinks the house is worth $300,000.

A common-sense approach would be to split the difference: You and your wife would then agree that the property is worth $290,000.

Since you decided to keep the property instead of selling it to a third party, you are saving several thousand dollars in closing expenses. It's important that you back out the estimated expenses if you were to sell the home. For instance, if 6 percent is a reasonable marketing cost your sales expenses would be $17,400. Subtract $17,400 from $290,000 and the net value of the home is $272,600.

You might also want to consider other marketing costs, such as legal fees, points paid as a condition of the sale, etc.

Assuming your original down payment is considered a joint asset, your total joint equity in the property is $132,600 ($272,600 minus the mortgage balance of $140,000).

You would then owe your wife $66,300 in cash and you must remove her name from the liability on the property.

The easiest way to do this is to apply for "cash out" refinance mortgage in the amount of $206,300. You would pay off the old loan and receive enough cash to pay your wife her share of the equity. Thirty-year fixed rate mortgages are running around 6.75 percent these days so it's not a bad deal. Figure on a monthly payment to be in the $1,350 range, plus taxes and insurance.

If you and your wife can agree on this type of solution, it could save you a bundle in legal fees. Good luck.

For more articles by Henry Savage, please press here.

Published: October 31, 2001

Use of this article without permission is a violation of federal copyright laws.

, the president of PMC Mortgage Corporation in Alexandria, VA, is a mortgage columnist whose work has appeared in numerous consumer, real estate, and mortgage publications. Mr. Savage welcomes your questions for possible use in this column, however because of the volume of mail received, Mr. Savage cannot answer questions individually.