<p>My parents own two houses. One they're renting out and one we live in. They make a combined about $85,000 a year, and they don't have the second house just for luxury. It's because the stupid economic crisis has made it hard to sell that house. They've been trying to sell it for like 3 years, so they ended up renting it out. Why the heck does the second house increase the EFC if they're struggling to survive while owning a second house. It's ridiculous. Does more then one home always hurt your chances on the FAFSA?</p>
<p>Yes, if you have equity in it. But if your parents are struggling, they may be upside down and not have equity in it.</p>
<p>The rental income also affects the EFC.</p>
<p>The fact that the home is “not a luxury” is irrelevant. </p>
<p>The value of the rental (minus mortgage on it) and the income from the rental count. Why wouldn’t they???</p>
<p>I’m sorry, but “struggling to survive” on $85K? And if they REALLY needed to sell, they could and just take less, but they probably don’t want to.</p>
<p>This is a luxury item, because if they are renting it out, they most likely are positively cashflowing, and thus increasing equity so they are making money on this house. This will increase your EFC, because they have more equity and thus can borrow against it and thus afford more college.</p>
<p>
I haven’t heard investments referred to as “luxury items” before. I think the op meant that it wasn’t like a vacation home or something?</p>
<p>trunl,</p>
<p>Depending upon where they live and the personal situation, they could easily be struggling. You also don’t know if they have positive cash flow. That is very hard to do in a single family house. Also, they may or may not be under water. We don’t know the the reason the house hasn’t sold but in this environment, it could easily be because the the mortgage is larger than the value of the house. </p>
<p>OP - make sure that you use the equity for the value of the house (value - mortgage). FOr example if the house is worth 150k and you owe 150k or more, you would put a value of zero into the FA formulas</p>
<p>Dude, trunl. I live in Plano, Texas. Look it up. Richest city in America as of 2009. The cost to live here is ridiculous, and then we have to pay for a second house in Kissimmee, Florida because we can’t sell it. We are a family of five. Two parents, three children. My parents honestly can’t cough up anything for college until they sell that house, and that will be a long while. Anything extra I want, I basically have to work for it and get money myself because my parents can afford extra stuff.</p>
<p>I live with a bunch of super rich kids and it’s so lame when they come to my house >.< “Why’s your tv so small?”</p>
<p>I think you need some new friends…</p>
<p>It’s a CHOICE to buy a second home while the first home hasn’t yet sold. Other families will cheaply rent or don’t move until the first home is sold.</p>
<p>I don’t think OP said how it was that they came to own two homes. For example, they might have inherited the Florida home, or they might have had to transfer jobs and found that buying the second home was financially better than renting with a family of 5.</p>
<p>*and found that buying the second home was financially better than renting with a family of 5. *</p>
<p>Financially better? Obviously not.</p>
<p>I’ve been thru transfers before. Those who buy a second home before the first one is sold are taking a tremendous risk if they don’t have the money for 2 mortgages. </p>
<p>There were other options; the family chose the risky one.</p>
<p>
Where has the op specified how they came to be in this position? Maybe I’m misunderstanding your tone, but you seem to be of the “well they made their bed with poor choices, now they have to lie in it” mindset. It doesn’t seem like we know enough about the circumstances to be so judgmental if that’s the case.</p>
<p>We had to move because of my dad’s job. The only job he could find in Florida was in Miami. He was forced to have to stay in Miami three days of the week, and then be with us for 4 days of the week. So he had to drive back and forth 5 hours twice or more a week. It was really frustrating because sometimes we really needed him, and he was hours away from us. So later, he found a job with that same company in Dallas, Texas and my parents made the choice to move to Texas. </p>
<p>I guess the real curse here is that my parents puts family over work.</p>
<p>*Maybe I’m misunderstanding your tone, but you seem to be of the “well they made their bed with poor choices, now they have to lie in it” mindset. *</p>
<p>My point is that many of us have had to transfer with jobs and we don’t choose to buy a second home until the first is sold so that we aren’t in the financially risky position of trying to cover two mortgages (which most families cannot do).</p>
<p>Some families rent something cheap (even if it means being uncomfortably crowded) until the other home sells, some families have the mom and kids stay in the original home waiting for it to sell, while the dad rents in the new location, and some do what this family has done and that is to purchase the second home before the other sold. That’s a fine choice if the first home can be rather quickly rented out to cover the mortgage. </p>
<p>My point was the family wasn’t forced into this situation. Anyway…the current situation is the first home is being rented out and therefore there is NO REASON why it wouldn’t be considered an asset and the rent be considered income. </p>
<p>My intent was not to be harsh; the student was annoyed that the other house and its rent would count for financial aid as if his family was some kind of victim (and therefore it shouldn’t count).</p>
<p>It certainly seems true to me that what is or appears to be the best course of action in the big picture isn’t necessarily the best course in terms of qualifying for financial aid. I mean, one could choose to work at the local gas station and have 5 children and live like a pauper, thus qualifying for an EFC = 0. Is that the best big picture plan? Clearly not. </p>
<p>Maybe in this family’s case buying the second house made more sense than the other options in the big picture or in the economy in which the events took place, but now it is not making as much sense in terms of today’s economy or in terms of getting financial aid.</p>
<p>Nonetheless, now it is what it is, and they have to play this hand accordingly.</p>