<p>higherlead, you can't spend a home and you have to live somewhere. I don't know about EK, but I live an an area where home values are inflated and my home is very small and on the <em>lower end</em> of the spectrum for home values in my area, so I don't have the option of moving to smaller house nearby -- there isn't anything cheaper/smaller. I know that because of my income-to-debt ratio I do not qualify for a home equity loan -- and by "debt" I mean what I already pay on the mortgage -- I simply don't make enough money to qualify to borrow more. So borrowing on my equity is not an option. Moving away to a less expensive area is not an option... my job is HERE -- I can't very well give that up, or I would have no income at all. </p>
<p>I don't think EK is whining, and I'm not whining either -- but when someone has bought a home relatively cheaply and lived in it for a number of years -- and maybe the home is kind of run down because its older and the family doesn't have money to put into fancy renovations -- and then the market skyrockets and all of the sudden on paper the house becomes a huge asset -- but in real life the homeowner simply has more expenses (necessary repair, increased taxes) and no more money.... it isn't easy to have a system that adds $10 or $20K to their EFC because of the house they live in. </p>
<p>So yes, a homeowner is financially stronger than the renter -- but no, they don't have a whole lot more in available spending money. If a person has $500 left over each month after other expenses are paid -- then it doesn't matter whether they own a house or not, the maximum amount of money they can borrow is whatever they can get with a $500 monthly payment. The <em>value</em> of the house is whatever it is worth at the time it is sold -- as long as the family remains living in the house, the assessed or market value is a paper figure, but it can fluctuate down as well as up.</p>