<p>Hi, Im a college student with an EFC of 2547.
the Financial aid office in my school told me that since my father has some investments, my efc went up from 0 to that number. He bought a house in january 2009. its a two family house. we live in the first floor and he rents the second floor. The financial aid office told me that since he rents that is considered a property investment. However, he still pays a mortgage of 2,800 every month. his gross income in 2010 was 28k. Also, the house market value is 250 k. I noticed that in my fafsa my parent’s net worth of current investments is 125k. I wanna know if the EFC number is right since I help him out with the mortgage bill every month. I read that investment is the substraction of the property minus its debt (mortgage) and that gives u what u own or something like that. since we only have the house for 3 years. I believe we’ve barely been paying interest. He got a mortgage loan from bank of america to buy the house, I think 4% interest.</p>
<p>How does it work that the annual mortgage is more than annual income?</p>
<p>If an auto EFC doesn’t come into play then the EFC looks close, depending on your dad’s age. $125K in investments at 5.6% is about 7K EFC.</p>
<p>I believe for a two family home you would only report half the “equity” you have, since half of the property is your primary residence. As you said, “equity” is the value of the property minus the amount still owed on the mortgage. Your dad’s monthly statement from the mortgage bank will list the amount still owed.</p>
<p>I have to wonder, though, if you maybe don’t have all the facts on what your parent earns. It’s hard to believe he would have qualified for a mortgage with only $28K in income. Also, his income in 2011 is what FAFSA will need to know.</p>
<p>I know that my dad got the loan with the help of my uncle who earns much more. Im using my dads income for the 2010-2011 year. cus Financial aid said I have up to 3k of aid. but since I took 7 credits. they only gave me half of it. so 750 per semester. the 7 credits total tuition was close to 1100, so I have to pay the difference. Also, I had to buy books on my own.</p>
<p>
</p>
<p>
</p>
<p>I’m confused by these two statements.
If you are filing the FAFSA for the 2012-13 school year you HAVE to use his 2011 income number. It’s not optional.</p>
<p>When you rent property there are deductions you take that the IRS allows, but many colleges don’t. I’d guess that’s where your case becomes less straight forward.</p>
<p>Your dad should determine the market value of the house, then subtract the amount of the outstanding mortgage. This is the worth. Because FAFSA does not require you to report the value of your primary residence, you only have to report the value of the portion of the home that is rented out. So … let’s say the house is worth $250,000 and your dad owes $150,000. The value is $100,000 … but you only have to report half that, or $50,000. If the financial aid office tells you otherwise, they are mistaken (they can refer to the Federal Aid Handbook to find out that what I am telling you is correct).</p>
<p>Does your dad have money in the bank, in CDs, in money market accounts, in stocks or bonds? If so - and if the money is not in protected retirement accounts (IRA, KEOGH, 401K, 403B) - that has to be reported. You would add the value of the investments to the value you computed for the investment portion of your home to get the total assets.</p>
<p>When you rent property there are deductions you take that the IRS allows, but many colleges don’t. I’d guess that’s where your case becomes less straight forward. </p>
<hr>
<p>For purposes of federal aid, like Pell, they have to allow those deductions. It’s only for institutional aid that a college can mess with the elements of the EFC formula.</p>