Reply to Brown eliminates tuition for families up to $125K and removes home equity in the FA equation

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[quote=Anonymous][quote=Anonymous]Those families are an entirely different situation and they'd probably get aid either way as they look at income given they deserve the aid..  The issue is really families who are living above their means making far more and choose million dollar homes vs. lower cost and saving for college.[/quote]

Is this really "the issue"?

To qualify for a mortgage on a $1M home, you'd have to make more than $125K.  There are lots of suggested calculations, but here is a common one:

[i]1. Multiply Your Annual Income By 2.5 or 3
This was the basic rule of thumb for many years. Simply take your gross income and multiply it by 2.5 or 3, to get the maximum value of the home you can afford. For somebody making $100,000 a year, the maximum purchase price on a new home should be somewhere between $250,000 and $300,000.[/i]

https://www.doughroller.net/mortgages/how-much-house-can-i-afford/

So by that measurement, the choice seems unlikely to affect financial aid.

This one is more liberal with super low interest rates of tday

[i]2. The 28% Front-End Ratio
When banks evaluate your home loan application, they will look at one very important calculation in particular. This is known as your housing-expense-to-income ratio.

Also called the front-end ratio, banks will take your projected housing expenses for the home you want to buy and divide by your total monthly income. Generally, mortgage companies are looking for a ratio of 28% or less.

For example, let’s say that your income is $10,000 a month. Judging by this, most banks would qualify you for a loan (subject to other factors, of course), so long as your total housing expenses do not exceed $2,800 each month. This means that your mortgage payment (principal and interest), property taxes, PMI (if required), and homeowner’s insurance all need to stay below this threshold.[/i]

According to https://bundleloan.com/blog/1-million-dollar-mortgage/, The monthly payment on a 1 million dollar mortgage is $5,694.  More than twice what a $120K income can qualify for.

So, it appears that only with lower incomes those that bought long ago will now get financial aid with home value excluded.  The "choose million dollar homes vs. lower cost and saving for college" family is largely a myth.[/quote]

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