Home Equity Question

Paying for College
21

<p>I made sure we used the same value that our county uses for assessing property tax. I felt it was important to use a number that had some “official” traction to it. </p>

<p>It is incredibly easy to find “fibbers” any time you are an expert in a field (a good reason to never think you can out think the IRS). So an applicant that shaves big bucks off the home value in the hopes of shading the PROFILE better is playing with fire. Far better to be up front and perhaps indicate (via a letter directly to the FA office) any details that are significant: for instance, that one lives in a very high housing cost area. Or that the homeowner needs to replace a roof or windows or furnace (enclose copies of estimates to get the work done). </p>

<p>It is the entire job of a FA officer to separate the sheep from the goats. I am sure that an experienced FA officer has tons of stories to tell about parental tap dancing. Actually, I don’t know that Zillow is a great thing for parents. It makes it very easy for anyone to see what a house is worth – and what the neighborhood is like. </p>

<p>Have a care. I definitely like “How to pay for college without going broke” by Khany for all its helpful tips.</p>

22

<p>I wish I could use the tax assessor’s value for our house, because of Proposition 13 (CA) it is much less than its true value.</p>

23

<p>I gave up a long time ago trying to convince the assessors why my house is not worth what it is assessed for. The age and condition don’t seem to matter to them. Guess I will have a realtor come by and give me an estimate, since I want to sell anyway.</p>

24

<p>I’m not sure if it’s about “fibbers” but more about trying not to give the PROFILE a higher number than is required. There are so many vague questions with little guidance it almost appears they want you confused. Take the home equity thing…wouldn’t it just be easier to say got to “ABC” and to calc your equity or use x% of your taxed value or include a reduction of 4% for brokers commission. Since this form is the lifeblood of our finaid, and my decision about where to go, we want to get as accurate as possible and not give any number higher than we have to.</p>

25

<p>Thanks Descartesz, Count, OlyMom. I work in the mortgage industry (don’t hate me – never did subprime – sold only 3 option arms in my 20+ year career) so maybe I’m looking into this more than the average person. Take the same house and 2 appraisers can give you values that vary by 10-20% of value (compared to what the homeowner thought it was). Since value contains a subjective component, I was trying to determine how much of that can come in to play. I know what my neighbor sold her house at; I know my house is in much worse shape (see forum topic – need fin aid). The index is valuable – gave me an honest “ballpark” value to refer to. Also using the tax assessment is a good idea. </p>

<p>My other problem with the whole “you have equity therefore you can pay tuition” assumption is this: have any of the fin aid people kept up with what’s going on in the credit markets? No one is lending 100% of value anymore. Most HELOCs cap out at 80% total liens (if they even allow that). And the government programs to help people who are underwater don’t allow cash back.</p>

26

<p>Based on the calculator on its website, it appears that Cornell also limits its consideration of home equity to 1.2 times income.</p>

<p>Updating the list I made earlier, we have the following.</p>

<p>Colleges that do not consider home equity:
Harvard
Priceton
Whitman College
MIT ( if income less than $100,000)</p>

<p>Colleges that cap home equity at 1.2 times income:
Amherst
Cornell
Dartmouth
Stanford
Williams</p>

<p>Pursuant to the information provided by Descartesz, it also appears that the following colleges may limit home equity to 2.4 times income:
Boston College
Brown University
Claremont McKenna College
College of the Holy Cross
Columbia University
Davidson College
Duke University
Emory University
Georgetown University
Haverford College
MIT (for incomes above $100,000)
Northwestern University
Pomona College
Rice University
Swarthmore College
University of Chicago
University of Notre Dame
University of Pennsylvania
Vanderbilt University
Wellesley College
Wesleyan University</p>

<p>If anyone has any additional information on this issue, please post it on this thread.</p>

27

<p>I spoke with a financial aid representative from USC who told me they cap home equity at 2 times income. He said even then, its not that they expect you to sell your home or borrow against it, but they take home ownership into account when determining the family’s overall financial strength. A family who owns their home is generally in a stronger financial position than a family that who not. Hope that helps.</p>

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<p>

you can check the [FinAid</a> | Calculators | Federal Housing Index Calculator](<a href=“http://www.finaid.org/calculators/federalhousing.phtml]FinAid”>http://www.finaid.org/calculators/federalhousing.phtml) there is a calculator on the bottom that you can use to check market value, also you can go to [Zillow</a> - Real Estate, Homes for Sale & Real Estate Values](<a href=“http://www.zillow.com%5DZillow”>http://www.zillow.com) or [Cyberhomes.com</a> - Real Estate Listings and Real Estate Info](<a href=“http://www.cyberhomes.com%5DCyberhomes.com”>http://www.cyberhomes.com) for market value- mortgage companies and banks will often refer to zillow.</p>

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<p><a href=“2008”>quote</a> The statement did not explicitly state that Yale would exclude home equity from consideration in financial aid calculations, something that both Harvard and Princeton University now do.
YALE FOLLOWS HARVARD IN SWEEPING FINANCIAL-AID REFORM TARGETING MIDDLE-CLASS FAMILIES | Yale Daily News

[/quote]
recently at a YALE presentation the admissions rep said YALE alots for 200k Assets including primary home value.</p>

30

<p>I attended a finAid workshop at Smith College this past summer and was told that basically one assesses their own home’s value minus outstanding mortgage/home eq debt (as you, Classof2015 described) and you put it on the application. They have “ways” of finding out if you are accurate–meaning if you live on Central Park South and say your apt. is only worth $400,000, then a red flag goes up and they investigate. But it sounded to me that if you put a “reasonable” number down then they take it at face value. It’s all a crap shoot from what I can ascertain!</p>

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<p>…and I hope that schools are not using zillow to corroborate. I chuckle everytime I see our property listing – zillow has our garage listed as a separate house worth $195k. That would really throw off our financial worth picture!</p>

32

<p>I emailed some colleges regarding the home equity issue and received responses from most of them. All of those that responded provided at least some information regarding their treatment of home equity. The colleges I received responses from were: Yale, Bowdoin, Middlebury, Chapman, Mount Holyoke, Colby, Bates, Barnard, Vassar, and Grinnell. I have included the information they provided on the following updated list. The colleges are listed along with the source of the information. One of the policies of the 568 Presidential Group is to limit home equity to 1.2 times income and I have confirmed this by using financial calculators at a few of the member schools. </p>

<p>Colleges that do not consider home equity:</p>

<p>Chapman University (email)
Grinnell College (email)
Harvard (website)
MIT (if income less than $100,000) (website)
Princeton (website)
Whitman College (website)</p>

<p>Colleges that cap home equity at 1.2 times income:</p>

<p>Amherst (website calculator and 568 group member)
Cornell (website calculator and 568 group member )
Dartmouth (website calculator and 568 group member )
Stanford (website)
Williams (website calculator and 568 group member)
Yale (email)</p>

<p>Boston College (568 group member)
Brown University (568 group member)
Claremont McKenna College (568 group member)
College of the Holy Cross (568 group member)
Columbia University (568 group member)
Davidson College (568 group member)
Duke University (568 group member)
Emory University (568 group member)
Georgetown University (568 group member)
Haverford College (568 group member)
Massachusetts Institute of Technology (568 group member)
Northwestern University (568 group member)
Pomona College (568 group member)
Rice University (568 group member)
Swarthmore College (568 group member)
University of Chicago (568 group member)
University of Notre Dame (568 group member)
University of Pennsylvania (568 group member)
Vanderbilt University (568 group member)
Wellesley College (568 group member)
Wesleyan University (568 group member)</p>

<p>Colleges that cap home equity at 2 times income:</p>

<p>Bates (email)
Colby (email- as long as home has been owned for a number of years)
Middlebury (email)
USC (conversation memama had with a financial representative)
Vassar (email- on a case by case basis, where it is the only asset and
is a form of retirement) </p>

<p>Colleges that have no cap on home equity:</p>

<p>Barnard (email- unless there is some unusual situation such as a prolonged unemployment
period that is still in affect or if one parent is very ill)
Bowdoin (email- but, may limit if owned more than 10 years and in a high real estate area)
Mount Holyoke (email- but, may limit consideration based on location and date of purchase)</p>

<p>If anyone has any additional information on this issue, please post it on this thread. If you want information about a particular college and it is not here I suggest that you email them, they generally seem to be willing to provide this information if asked.</p>

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<p>thank u for such a good bulk of info.</p>

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<p>My D applied EA to Northeastern and I called them to ask about how they base value of home and they said to use Zillow. The Fed Housing Index is much lower for us and I thought I could use a guesstimate between the two until I talked to NEU.</p>

35

<p>I notice on the HPI fed website noted above ( <a href=“http://www.fhfa.gov/default.aspx?Page=86&Area=State&AreaID=IL&PurchaseQtr=&ValuationQtr=2010Q2&Price=125000[/url]”>http://www.fhfa.gov/default.aspx?Page=86&Area=State&AreaID=IL&PurchaseQtr=&ValuationQtr=2010Q2&Price=125000&lt;/a&gt; ) it does not seem to have valuations for homes purchased before 1991. pls correct me if I am wrong.</p>