<p>When filling out financial aid forms and it asks for home equity amounts, does one include the theoretical amount even if they have a home equity loan already and can't borrow anymore? In other words, I have a home equity loan for less than the total amount of equity but can't take out another loan because I already have one.</p>
<p>The official forms usually ask for the market value of your home and the amount of any loans against it, so it might be: value $250,000, loands $150,000 or something like that.</p>
<p>The areas people question are market value vs tax assesor value v original purchase price + appreciation.....in other words, how does one determine value. It would seem you could use the method you find favorable, as long as you are fair & reasonable and can justify it when/if questioned.</p>
<p>Some people also subtract the commission & fees of selling as that money would not be available if you had to seel your house to pay for college.</p>
<p>NO, NO, NO --- you CANNOT subtract the commission and fees of selling the house!!! That is NOT considered in the value of the house! </p>
<p>"Market value" is the amount you could sell the house for. Assessor value CANNOT be used either - and besides, in every town I have ever lived in, it is deliberaterly only a percentage of market value.</p>
<p>Thanks NEDad, I was not sure, but I've seen it discussed here!</p>
<p>Most of the sites Profi;e schools give specifc info about what they want, not simply "value" of your home, but "market value" or purchase price, year, etc. So, it makes it simple!</p>
<p>I respectfully disagree with nedad. Financial aid applications want the market value of your home if you had to sell it on the day you file. Inflating the value of your home is very good for ones ego, but very bad for college aid. On the other hand, you cant lowball the value because colleges have a way of checking it. Its called the federal housing index multiplier go online and check it out. However, the CSS Profiles instructions specifically state that the parents should use the price they could reasonably expect to receive for their home if it were sold today (meaning on the day you file the aid form).</p>
<p>Whether something is reasonable is a question of fact. The fact of the matter is that you incur costs in selling your home. So the amount that a parent should reasonably expect to receive" has to take into account the costs of selling your home (commissions, reasonable repairs (e.g., painting). You cant go crazy and just make up costs, but the reasonable costs of selling it should be considered when you file an aid form.</p>
<p>Furthermore, the Profile asks for a home's value "if it were sold today." It's reasonable to say that an owner that had to sell his house today would probably get less than an owner who could wait for a while. Again, you can't go crazy and lowball your home's value, but you can certainly take into account what you'd receive from a firesale of your home v. being in a position to wait for a buyer to offer your asking price.</p>
<p>I do not disagree with you at all - up to a point. Yes, you use TODAY'S market value. But the colleges have NO INTEREST in what you could "get" for your house after expenses (believe me, I know - I've done this for 25 years). They are interested in a) what you might conceivably borrow and b) whether you are hiding something. If you live in a 1.5 million house and are crying poor mouth, there is something going on.</p>
<p>Try it. Call up a college and ask if you can subtract commissions and painting expenses! They will do as my Ivy alma mater's office does when this happens: bust up laughing!</p>
<p>I agree- they don't hypothesize that you are going to sell it and use the proceeds to pay for tuition, they want to see what you could free up if you refinanced your mortgage.</p>
<p>I agree that colleges are trying, in part, to find out what a family can borrow from the equity in their homes. I understand that the colleges dont care about commissions, etc. Initially, colleges want a number for the value of the parents home so they can stick that number in their computers. All Im saying is that before you put some random number on an aid form, a person (or their parents) should realistically decide what their home is worth if they had to sell it on the day they file, subtract any reasonable costs (commissions, repairs, etc) that would be involved in selling their home, and put that answer on the line regarding home value. Just dont put some enormous number down on a form before thinking about it and the effect that it will have.</p>
<p>I understand about being honest and fair and so forth, but what I wanted to know is this: we have a 100 year old home on which we took out a home equity loan last year because we absolutely had to do some repairs. We didn't take out the entire amount of equity in the home, so technically we do have some equity, but since we already have a home equity loan, we can't borrow any more money at all. Seems like a little of a catch 22: present equity on financial aid papers, but can absolutely not borrow a penny of it for college.</p>
<p>Zooser:
Home Equity = What You Could Sell the House For - Debt Secured by a Lien on the House</p>
<p>What you are asking about is interesting, but irrelevant to solving the above equation.</p>
<p>Also, irrelevant in principle to financial aid considerations. You can always redo your present home equity loan, taking out the max. Or get a home equity line of credit, so the funds are available that way. Or, as far as I know for most places, get more than one home equity loan, though you say for some reason in your locale you can't.</p>
<p>overly complicated. We use the latest appraised value (county). I don't know what the market value is, don't really care, and know that its not how much the owner thinks it worth but the buyer thinks its worth. We use this value as the starting point for all our calculations.</p>
<p>I understand what Zooser is asking..I think!
If you are UNABLE to afford to PAY BACK the payments on a home equity loan,due to insufficient income, does the FAFSA or whomever take that into consideration? Is your current income taken into consideration when determining how much of that equity you can actually afford a payment on?</p>
<p>there are some guidelines about income & assets, if your income is below a certain amount, they don't even consider your assets. I do not know what happens to some one in a very expensive area, but it does seem that most of fin aid calculations are income driven, unless the assets have a proportionate value much much higher than one would expect for your income level.</p>