Incidentally, most colleges that consider home equity cap it at some multiplier of income (2x, 1.5x, 4x) whatever…so that, depending on the circumstances, the impact on aid may be relatively small.
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Yes, we also appealed the high assessed value and have decision letter from the county. Homes around us have been purchased and rehabbed causing higher values. Our home does not have any improvements. This is why I wanted to know if others used the tax assessed value.
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Yes, there are hundreds of different situations depending on neighborhood, timing of purchase, interest rates, etc. The first house I lost money on was 15 miles away from a manufacturing facility. The company announced it was closing the facility in three years- but overnight property values fell by 20% or so. Of course taxes didn’t go down, utilities didn’t go down, assessed values didn’t go down- so everyone within a 30 mile radius or so was sitting on something that was instantly worth a lot less overnight. We were in the process of relocating for work… ugh.
No financial aid formula can take into account every single homeowners personal situation.
Thank you all for taking time to reply!
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Assessments for tax purposes can be wildly out of date, and/or inaccurate for other reasons, depending on the local assessment scheme.
That doesn’t mean I would not give it a shot when filling out the actual forms, particularly if I believed it was a fairer representation of actual market value.
But if you are running NPCs, I would personally at least try them with a Zillow value or such. If it made a big difference, I would accept that as a risk, that they would use something like Zillow for this purpose regardless of what I used in the form.
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How does an under-construction house get accounted for? We hopefully will be breaking ground in late summer. We sold our other house a few years back and are currently renting. The $ from the sale of the first home will be the down payment on the new construction loan/mortgage. I want to run accurate NPCs on schools D25 is looking at because I don’t want her to apply to schools we won’t be able to afford.
Our tax assessment is not 100% of the property value so check to see what yours is. We used comparable sales.
Re retirement account balances…you might be asked for those but there is zero evidence that those are used in the financial aid calculation
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I would suggest calling her “favorite” school to ask that question.
She doesn’t have a favorite right now. Figuring out costs and potential budget is part of the narrowing down process. Would I put the estimated building cost on the NPC? And since the house wouldn’t be finished until at least the Fall of 2025, does it even count as an asset before it’s done?
I already know that we don’t qualify for anything from our CA public schools, but for private schools, it seems like we do qualify for some institutional grants at some schools. I just don’t want her to apply to a school she really likes that ends up being too expensive. It’s better to have an idea upfront.
In many contexts I think the unimproved land value and any cash in accounts saved for construction would be assets, but the building under construction would not have any assessable value yet (I think the trigger is usually something like a permit of occupancy). Then usually this would be net of any actual mortgage, although if you merely had secured the loan but it had not yet been fully distributed, that portion might not count yet.
But I agree if this is material you might want to ask a couple sample colleges of interest. Doesn’t have to be known favorites yet, just reasonable possibilities if affordable.
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Where is the money sitting that you are using to build this house? If in one of your accounts, that will be an asset
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I hope you understand that most schools will review FA every year. If something will not be reported this year, but reported next --you may have a problem down the road to pay for college…
Have you heard stories people commit to college with 2 kids, one graduate and then FA stopped… School assumes with one in college now you can afford full tuition…
This will depend on the college. There are some colleges that hold costs the same in all years (Ohio public universities, for example).
As I said earlier, your money in the bank to build this house is considered an asset. The land the house is on is considered an asset.
And yes, you do need to consider future years. You want a four year plan…not a one year plan.
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Thank you for the responses. I added 3 columns to our college spreadsheet with 3 different NPCs based on three possible scenarios (haven’t started construction and down payment $ is sitting in savings, construction is complete and the estimated value of the home is included, and an in between of $ has been put toward build, but construction isn’t complete). The difference in net price for sample school A was about $10,000, so that gives us a rough idea of how costs might fluctuate over the years.
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I’m amazed to learn that the tax assessment value is considered legitimate for FAFSA and CSS. Unless the home is of new or more recent construction most tax assessments, in my experience, are not indicative of market value. If colleges are accepting that value students are fortunate because those properties are likely undervalued by tens if not hundreds of thousands of dollars.
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Exactly. Assessed value is far below Fair Market Value here. I ended up using a rough FMV discounted by 20% for quick sale. Obviously received nothing from FAFSA or CSS schools. Probably will not bother with S25 unless he gets into a CSS school that considers the fact that we will have two in college at the same time.
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our assessment lists the “fair market value”. Back when we appealed, they had it assessed at more than any house in our subdivision had ever sold for (and our house is far from the nicest/biggest/most updated).
Market value from tax assessment is what everyone I know has used for their primary home with no issue. Many schools have their own data sources and will override whatever value you enter anyway. If that happens and you feel they erred a phone call is worthwhile.
The tax assessed value here is 70% of the market value of a house….not 100%. I think colleges are looking for 100% of your value, not a lesser %age.
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Is there guidance somewhere that recommends that calculation for a quick sale?
My methodology has been been to use average price per sq. ft. for recent sales in the neighborhood via Zillow, applied to a corrected actual square footage (Zillow has the wrong figure for ours); and then discount this by an estimate of repair costs to bring up condition to comps (e.g., overdue roof replacement and other updates) and the closing costs paid by seller (approximately 8% of sales price).
If ever “audited,” I think this is a defensible calculation to determine actual equity that could be extracted.