<p>In fairness, I think RtR just wanted to remind us there are all sorts of circumstances. </p>
<p>
</p>
<p>Why not? Your taxes might be lower with the mortgage deduction but I can’t imagine any impact on financial aid, other than home equity which is a negative.</p>
<p>Because if there is home equity, the cash will affect financial aid. Some schools discount home equity. </p>
<p>@drgoogle - I thought we were talking about selling a home and moving into an apartment because there is a lot of debt leftover from the unemployed years so cash is needed to pay that down. (weren’t you responding to suzy’s "But now that your BIL is working again, why can’t they sell their house and move to a cheaper place or an apartment? "?)</p>
<p>My thoughts went first to a smaller housing payment for an apartment vs house, and then to renting vs owning. Even if the family chose to sell and then rent - not buy an apartment, I’d guess there’d be an immediate use for any proceeds from the sale.</p>
<p>When my financial situation changed for the worse two years ago, the first thing I did was sell my larger home and move into a smaller one, it’s the biggest chunk of the budget, after all. FA stayed the same, monthly costs dropped. </p>
<p>^That’s what I did when I knew my job was relocating and I wasn’t. I cut our living space in half and our housing expenses by a third. A smaller house is obviously cheaper to heat/cool/maintain/clean. It made a pretty big difference.</p>
<p>Renting is not necessarily cheaper. It depends on the location. I didn’t read that BIL is not able to make payment, if they can’t make payment they would have moved already. I’m guessing they are taking home equity loan and that’s debt. How else are they surviving 5 years without employment?</p>
<p>If they have lived in their home a long time, presumably they do have a significant amount of equity. Even $150k i savings would not last very long with a family of five and a decent-sized mortgage.</p>
<p>No idea on the specifics but I think we can all agree that downsizing a home is usually a good idea if finances are tight. The specifics of equity and FA should be taken into consideration as well, if applicable and, of course, the market. </p>
<p>If downsizing, wouldn’t it be difficult to get a mortgage on the new home if your income if only $20,000?</p>
<p>The husband is making $175K again.</p>
<p>The point of my post wasn’t to generate debate and solutions regarding my sister’s situation, only to point out that there are all kinds of circumstances beyond one’s control that can affect whether someone can save for college or not - regardless of income. (While I appreciate that members of CC area naturally inclined to want to “solve the problem,” often there is no real way to solve it.) </p>
<p>Sorry RTR, but did not want others to think that this was an insurmountable problem, but you are correct at times the solution that seems obvious to others, may not be workable for many reasons. I hope, however, that your niece ends up with some great choices. If she wants to go to CC, great, but if not hopefully she can go away to college.</p>
<p>As to the selling and renting, in the NY suburbs, rents are very high as are house prices. Even a 2-bedroom apt may be higher than the mortgage and taxes in towns with good schools, once the tax savings are taken into account. I know several people who looked to downsize and had a very hard time finding housing in the area that would save enough money to make up for the cost of moving. </p>
<p>I’m sure it all depends. In my case, I cut housing costs by 40% by downsizing (less than half a mile away). If I’d wanted an apartment I could have gone lower still. </p>
<p>Our mortgage is significantly less than the going rent around here. I check periodically on the rents at the townhouse complex where we used to live and the rent is about 150% of our mortgage (PITI, and before taking into account he tax benefits of ownership). </p>
<p>S1 and DIL’s 2 BR apartment is double our mortgage and we both live in high COL areas. </p>
<p>It’s definitely a regional thing, and there are tradeoffs both ways. </p>
<p>In my area it would be a loosing proposition to sell your house and rent. So it depends on the location. I just bought a new house and I can get rent for more than my mortgage plus property tax plus insurance.
In fact there a few houses were bought for the purpose of renting as non-owner occupied.</p>