<p>I have a question that I have not seen addressed lately. Let's say that your adjusted income is less than 50,000, yet you own your home and have 200000 equity...and a mortgage of 200000 left to go. The problem is that if we got a loan to pay for college, we don't have the income to make the loan payments! Do schools know this or is this something that we'd need to share with them in a separate letter. I would imagine that this comes up alot...any input?</p>
<p>they ask you what your equity is. In the example above, your equity is 0.</p>
<p>If the house is valued at 400000 and we have equity of 200000, then our mortgage left is 200000...that can't be equity of 0...unless I am misunderstanding!????</p>
<p>You are right - if the house is worth $400,000 and you owe $200,000 then your equity is $200,000. I don't know how CSS treats it. FAFSA ignores it (assuming it is your primary home).</p>
<p>Profile simply collects the information regarding home equity. The SCHOOLS determine how they use that information. They have many varying formulas for the %age of home equity that is used in their finaid calculations. Some schools don't count home equity at all. Others use a very high percentage of it with the assumption that you can borrow against it.</p>
<p>This was a big question I had several months ago, too. I asked outright at a couple of schools and never got a concrete answer. Thumper1 is totally right that it varies at different CSS Profile schools. Some don't count home equity at all (although I think there's very few of those, even among the elite schools), some count it as 100% asset. Others cap it at some percentage of your income. The latter was the case for us. Our income is relatively modest, so the amount of equity we have in our home was capped as an asset by some formula based on our income. That helps at least a little with the problem of not being able to make payments on a home equity loan. We may still have to borrow against the house, but not to the point that we'd risk losing it altogether.</p>
<p>I'd only add that once you get your financial aid package, it can also sometimes be negotiable and if home equity is the sticking point, FA offices might be willing to make some adjustments there for you.</p>