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My family is in middle of buying a house. We have six people in our family while only 3 (Me, sister, mother) dependant on my father. The other two are my grandparents. Thus we need a large home. We live in Nashua, NH. The prices are very high. We are looking to buy a house that costs near $475,000 with about 100,000 down. But the problem is my college expenses coming soon in 2.5 years. I am a sophomore in HS currently. My parents are worrying about the the second year expenses as the for the first year, we will have sufficent amount of money. Stating the I dont get any scholarships, and I plan on goign to ta Ivy League school, how will the selection of financial aids/students loans, and stuff affect me? Our assets currently are above $200,000, but we cant scarifice for a smaller home since we have so many people and utility to pay for. Our total income is about $103,000. I would like some advice. Please...

By Dadster on Saturday, January 25, 2003 - 07:22 pm: Edit

Nto, your dilemma is fairly common. In high-cost areas, you have to spend a ton of money for housing, but you don't get a break from the colleges for that. Your income is high enough that your aid won't be very high if you are the only kid in college. You or your folks can run some "what if" calculations using one of the many free EFC (expected family contribution) calculators on the web.

Your college choices will also have an effect. The FAFSA doesn't consider home equity, but the Profile (used by many elites) does.

Here are my thoughts to position yourself best. First, avoid keeping any money in your name. It gets counted at a much higher rate. Second, investing in the home may actually help your EFC by reducing your parents' liquid assets.

I don't know what the financial situation is with your grandparents, but there might be some strategies there, too. Their assets and income are never consided by colleges. So, if they were going to contribute to the down payment, for example, it would be better if they put that money aside for you and let your parents pay more. This would reduce your family's liquid assets and potentially increase aid.

One thing for sure - you can't be absolutely certain what things will look like in a couple of years. (See the Financial Aid Uncertainty Principle article on this site - it addresses this exact issue. Jobs get eliminated, business hit rough times, etc. - so rather than just thinking "our income is too high, might as well not plan at all", I'd recommend planning as if you would be eligble for aid and taking the appropriate steps.

One other thought - be sure to consider a range of colleges. If your stats are Ivy-caliber, you will probably get some fantastic aid offers from schools that are somewhat less selective but where you can still get a world-class education. Good luck!

By Nto514 (Nto514) on Saturday, January 25, 2003 - 07:38 pm: Edit

I plan on going onto Medical School after college, which is will be a lot easier to handle as i have learned from a lot that the avergage medical student has a debt of about 100,000. But, my grandparents moved here from India, and only my grandfather is a US citizen, there source of income is through their Social Security. They wont be contributing anything i think. I dont have any money under my name, execept for about 1000 in a mutual fund (which we lost A LOT in stocks). My dad is looking at the interest rates which would favor us int he form of having a 10 year loan fixed rate,a nd then the other 20 years will be variable ont hat current market. By that time, my education will be complete if i go through the normal medical route. That way my dad will be able to save for my expense by saving more 300 dollars ont he mortgage. Any more advice?

By Dadster on Saturday, January 25, 2003 - 07:50 pm: Edit

I don't know anything about your financial situation, but with mortgage rates at historic lows, I'd go with a 30 year fixed rate. Lock in the lowest rate you can. Any subsequent commercial loans your family will get will certainly be at a higher rate.

By Nto514 (Nto514) on Saturday, January 25, 2003 - 07:52 pm: Edit

The other rates at .5 lower for the 10 year fixed and etc.

By Chautchica (Chautchica) on Monday, May 05, 2003 - 11:44 pm: Edit

I am a graduate student in my late 20's who is unable to find an adequate place to rent in the small college town that I am moving to in the fall. People are suggesting to me to buy a house --which would be actually cheaper including a mortgage, utilities, and insurance---then renting in this area. Is this a wise idea? Is it legal?

By Dadster (Dadster) on Monday, May 05, 2003 - 11:53 pm: Edit

It's perfectly legal for you to buy a house. A lender, however, will want to see evidence of sufficient stable income to justify the mortgage. It's certainly worth looking at if you have the means and expect to be around for a period of years.

By Thedad (Thedad) on Tuesday, May 06, 2003 - 12:09 am: Edit

I've known several parents who bought their kids a condo for undergrad or grad school on the same economic basis. You may need a parent co-signer at the minimum...as a grad student it's highly unlikely that you would have the downpayment/income profile to support a purchase even in areas with moderate prices.

By 1tcm (1tcm) on Tuesday, May 06, 2003 - 07:10 am: Edit

FHA (Federal Housing Authority)has a program called "kiddie condo" (I know the name is weird) which is designed basically to do just as Thedad has suggested. It is a condo/home purchase program for a child w/assistance from the parent. Check with your local FHA lender to see if they offer this program. The program was being done at the mortgage company I was just working for and alot of parents are doing this for undergrads as well.