<p>We have been considering the purchase of a second home that would greatly ease our commute. We would like to keep our primary residence as a vacation home. </p>
<p>Can someone tell me how this affects the EFC, particularly with schools using the CSS profile?</p>
<p>You could try Collegeboard's EFC calculator:
<a href="http://apps.collegeboard.com/fincalc/efc_welcome.jsp%5B/url%5D">http://apps.collegeboard.com/fincalc/efc_welcome.jsp</a></p>
<p>The equity in one of your homes would be not included in FAFSA while the other home equity would be included as an asset (available for college funding)</p>
<p>For CSS profile, both home equities would be included in the calculations.</p>
<p>Somemom is exactly right. The second home's equity seems to be treated as an asset, similar to other savings/investments. So that only a certain percentage of it would be expected as a contribution. The primary home's equity is excluded by FAFSA.</p>
<p>The assumption would be that the second home is expendable...in other words, could be sold to offset college costs. Owning a second home is considered a "choice" and that second home does not have the same asset protection as a first home.</p>
<p>It is viewed no differently than a savings account, which is also a choice of what to do with your money. Some people invest in CD's, some in real estate, others keep it in a savings account--either way, the percentage available is treated the same. So you aren't penalized for investing in a second home any more than in stocks/bonds. It just doesn't get the exclusion that the primary home does. (In other words, if you had all your equity in a much larger primary home, FAFSA would exclude it all. The same equity split between the primary home and second home, FAFSA would only exclude the primary home equity.)</p>
<p>Actually, I don't believe the FAFSA asks for home equity values on primary homes at all. The Profile does, but not the FAFSA (correct me if I'm wrong folks). The FAFSA does, however, consider second homes to be investments. Therein lies the difference.</p>
<p>However, only equity is going to figure into your EFC, so if you are financing (or re-financing your first home) your total equity may not change much right away. Also, if you are purchasing with other assets (savings), the reduction in those assests would offset any increase in home equity, wouldn't it?</p>
<p>I believe FAFSA only asks about the equity in "other" real estate, which would include your second home. When I say FAFSA excludes primary home equity, I mean they don't count it (you are right--I think they don't even ask--although one school sent me a FAFSA verification that asked--that seemed strange--maybe it was the schools own form, because other schools didn't ask on the verification). I have 2 homes and filed both PROFILE and FAFSA. They appeared to treat the equity in the second home like any other invested money on both forms.</p>