House value and the PFS

Agincourt
Sat, 05 Dec 2015 01:01:32 +0000

Depends what you mean by “value”. “Appraised value” is what the property would likely sell for. “Equity” is what you would have after your loan is paid off. If you have a home with a high appraised value but you have low equity, you may well be better off than if you have a modest home with low appraised value but high equity.

Oftentimes in the FA world, those who practice common sense frugality are punished.

By the way, “assessed value” (county assessments for property tax purposes) is almost always well below “appraised value” and usually are two or three years behind in an up real estate market. Be aware that FA officers aren’t looking at your tax rates, they are looking at what you could/should be paying for your child’s education. If you have a house with a high market value and a lot of equity, the question arises: why don’t you take out a 2nd mortgage/equity line of credit to pay for your kid’s tuition?

Therefore, in terms of housing debt, more is better. FA officers will not expect you to sell your home if you happen to have a big mortgage. The rest - fancy car loans, expensive vacations, other expendables - yes, they will expect you to tighten your belt in those areas before they shell out financial aid.