2009 Military Intern Home Buying Thread

[thegunshow]

I know there was a similar thread last year, but I was just curious if any other future Interns are considering buying a house. Who are you using as a lender? USAA? Is it a even a good idea to buy now and then have to sell in 3 years?

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[The White Coat Investor]

I know there was a similar thread last year, but I was just curious if any other future Interns are considering buying a house. Who are you using as a lender? USAA? Is it a even a good idea to buy now and then have to sell in 3 years?

I used USAA. You can also use a mortgage broker. If you use a fairly standard loan such as 30 year fixed, 15 year fixed, or 5/1 ARM (reasonable since you'll only be there 3 years) most mortgages are pretty comparable. You pay higher fees or more points at one, and a slightly higher interest rate at another, but by and large, they're pretty similar. My next mortgage will probably come from Pentagon Federal. Shopping around is tough because any given company changes its quotes 1-2 times per day.

The usual advice for buying a home is that it takes 3-5 years to break even. Be very sure you don't pay too much. It really is a buyer's market out there.

One thing I don't regret was renting during residency. I avoided the buy/sell hassle, but also avoided the upkeep hassle. It takes a lot of time to maintain a house and a lot of time to be a resident. One or the other will be sacrificed when something breaks.

Good luck with your decision.

 

[DrMetal]

I know there was a similar thread last year, but I was just curious if any other future Interns are considering buying a house. Who are you using as a lender? USAA? Is it a even a good idea to buy now and then have to sell in 3 years?

Where are you thinking of buying? Depending on your geography, some would say that you'll need more than 5 years to break even, and even longer than that to make a profit (i.e. in San Diego) So I'd advise leaning more towards the fixed 30 yr or 15 yr loans, if you can afford them. Maybe a 7/1 ARM would be ok too. Also try to get a place that has good rental value (i.e. in a good school district, near shopping places etc), in case you want to rent it out later. And if you want something low maintenance (relative to a house), consider a condo or townhouse (which cheap as hell now, dime a dozen).

 

[colbgw02]

If you know that you'll want to sell in 3 years, then I would rent. I think you're very unlikely to come out ahead in that short span in this market. If you want to quantify it, then I believe that USAA.com has a rent vs. buy calculator.

 

[rotatores]

If you know that you'll want to sell in 3 years, then I would rent. I think you're very unlikely to come out ahead in that short span in this market. If you want to quantify it, then I believe that USAA.com has a rent vs. buy calculator.

If only it was that easy...but unfortunately those of us with dual income are kinda forced to buy or else we will get slaughtered come tax time. Unless of course we feel so inclined to donate a large portion of our income.

 

[psychbender]

I know there was a similar thread last year, but I was just curious if any other future Interns are considering buying a house. Who are you using as a lender? USAA? Is it a even a good idea to buy now and then have to sell in 3 years?

I'm considering buying in the DC/Bethesda area (will be there 4+ years), but haven't put too much time into investigating lenders and locations yet. I thought about using USAA, since I use them for so much else right now. One thing that sucks is the money I planned to use for a downpayment evaporated when the stock market tanked (~50% loss).

 

[colbgw02]

If only it was that easy...but unfortunately those of us with dual income are kinda forced to buy or else we will get slaughtered come tax time. Unless of course we feel so inclined to donate a large portion of our income.

Over just a three year period, you could rent, take the hit on the tax deduction, and still come out way ahead in terms of the bottom line. I don't really care if the money goes to a mortgage company or Uncle Sam. I just want to know how much I'll end up with, and I gotta believe that over just 3 years you'll end up with more my renting. Plus you'd probably get more home for your money that way.

I'm in a dual income household as well, and I've run the numbers over the past three years. If I had to sell my home today, then I would have come out over $40K better if I had rented after I take the mortgage interest tax benefits into consideration. And that doesn't even include the fact that my home has lost a marginal amount of its value since I bought it. Luckily for me, I don't have to sell my home today

Obviously that's only one example in one part of the country, but I think it's indicative of the overall trend. In most cases I don't see how turning a house over in 3 years in this market will be better than pocketing the money you save each month by renting.

 

[pgg]

I know there was a similar thread last year, but I was just curious if any other future Interns are considering buying a house. Who are you using as a lender? USAA? Is it a even a good idea to buy now and then have to sell in 3 years?

We've used Navy Federal Credit Union for all 3 of the houses we've bought, and have been totally happy.

Don't buy if you can't afford to pay that mortgage PLUS rent/mortgage on another house. The military may move you the day you finish residency, and in this market you don't want to be in a forced-to-sell situation.

 

[rotatores]

Over just a three year period, you could rent, take the hit on the tax deduction, and still come out way ahead in terms of the bottom line. I don't really care if the money goes to a mortgage company or Uncle Sam. I just want to know how much I'll end up with, and I gotta believe that over just 3 years you'll end up with more my renting. Plus you'd probably get more home for your money that way.

I'm in a dual income household as well, and I've run the numbers over the past three years. If I had to sell my home today, then I would have come out over $40K better if I had rented after I take the mortgage interest tax benefits into consideration. And that doesn't even include the fact that my home has lost a marginal amount of its value since I bought it. Luckily for me, I don't have to sell my home today

Obviously that's only one example in one part of the country, but I think it's indicative of the overall trend. In most cases I don't see how turning a house over in 3 years in this market will be better than pocketing the money you save each month by renting.

Okay...but realize...I'm referring to dual income for two staff physicians...not residents. So given the tax bracket we would NOT do better (again...this depends on the area you are moving too) if we rented (based on where we are going). Plus we're gonna likely be there for 4 years not 3!

 

[orbitsurgMD]

Okay...but realize...I'm referring to dual income for two staff physicians...not residents. So given the tax bracket we would NOT do better (again...this depends on the area you are moving too) if we rented (based on where we are going). Plus we're gonna likely be there for 4 years not 3!

Even with a double attending salary income, you could still come out behind in this extraordinarily unstable market. I doubt interest rates are going to rise soon, and break-even, if you buy into a declining market, could take you much longer than 5 years. Much, much longer. About the only military town I would think about buying property in right now would be San Antonio, TX, and even then, I would not expect to be topside for a few years.

DC is labelled as one of the worst sellers markets right now. California markets vary a lot, some are probably OK, like San Diego near the water, but inland, I would wonder about that. If I had to buy in DC, I would go inside the Beltway if at all possible and buy a smaller house in an older neighborhood that has lots large enough to do enlargement if you decide to go that way.

You haven't said where you are looking, yet.

Unless you are really certain of the market where you are going, you really ought to take a good look at short-term rental, 6 months, and decide what to do. Just about the worst thing that could happen after you buy your new house is for half your neighbors to hang their bank forclosure sale signs, and that might not be so much of an exaggeration, at that.

 

[rotatores]

Even with a double attending salary income, you could still come out behind in this extraordinarily unstable market. I doubt interest rates are going to rise soon, and break-even, if you buy into a declining market, could take you much longer than 5 years. Much, much longer. About the only military town I would think about buying property in right now would be San Antonio, TX, and even then, I would not expect to be topside for a few years.

DC is labelled as one of the worst sellers markets right now. California markets vary a lot, some are probably OK, like San Diego near the water, but inland, I would wonder about that. If I had to buy in DC, I would go inside the Beltway if at all possible and buy a smaller house in an older neighborhood that has lots large enough to do enlargement if you decide to go that way.

You haven't said where you are looking, yet.

Unless you are really certain of the market where you are going, you really ought to take a good look at short-term rental, 6 months, and decide what to do. Just about the worst thing that could happen after you buy your new house is for half your neighbors to hang their bank forclosure sale signs, and that might not be so much of an exaggeration, at that.

We're not certain where we will be...but the most likely location has never had a really bad or good housing market for that matter (the market has alway been extremely affordable). I've done the math...If we rent for the size we need we would get hosed over a 4 year period.

 

[DogFaceMedic]

It is a great buyers' market. In the buy vs rent calculation, you get $1700-2300 in BAH regardless of decision. If buy, think of BAH as subsidizing you purchase of ~$20K+/yr. Interest is tax deductable and BAH is tax exempt, so the math is strongly in favor of it. Yes, you have to mow the lawn yourself, so have children.

An option is to rent for the first few months and buy after the summer when the market slows and you'll have a better idea of both the market and where you want to live.

Buying makes money in two ways: you build equity or value increases. Either way it is preferable now. Regardless of decision, you have to be comfortable with the decision, otherwise you will never sleep thinking about your equity every day. It is a long term investment, so prepare yourself psychologically.

 

[Two-Bit]

This is an interesting website that may give you some insight regarding buying versus renting. Biased, but that's pretty obvious...

http://patrick.net/housing/crash.html

It has some good links to local area housing blogs, rent vs. own calculators, etc. Good luck!

 

[a1qwerty55]

Interest rates are crazy low (mid 4% range fixed)- factor in that the interest is dedictable and you are looking at a maybe 3% or less cost to borrow. Home ownership continues to be one of the big discriminators between the wealthy and those who are not.

You cannot time the market so look at a home as a long term investment. Purchase one which is unique in some way which makes it more desirable - better schools, better floor plan, whatever, but think like a renter as you need to be prepared to be a landlord if prices fall and you are forced to move.

Let's say you buy a home for 250K- and it costs you like 1200/mo - In 10 years that payment will look like a car payment, in 20 it will look like an electric bill to you. You lock in a payment and if inflation goes crazy - your cost drops since your income is inflation adjusted. Lastly, you are leveraging a pretty big investment with little downside and little intitial investment - If the property appreciates at 3% that is 3% on 250k, not on your downpayment.

Real estate is an important part of any diversified portfolio.

two great links

http://www.hughchou.org/calc/

http://www.jeacle.ie/mortgage/

 

[DogFaceMedic]

Good point: Fixed rates are very good mid to long term.

 

[MilitaryDoc]

I have a home in San Antonio, Texas and will be moving to PA for three years for another residency. I've been following the thread and am trying to decide between renting and selling myself. I have a quick question. Does anyone know of any websites to post rental homes or homes for sale to Medical students, Residents, Attending, etc. Military or Civilian?

 

[a1qwerty55]

I have a home in San Antonio, Texas and will be moving to PA for three years for another residency. I've been following the thread and am trying to decide between renting and selling myself. I have a quick question. Does anyone know of any websites to post rental homes or homes for sale to Medical students, Residents, Attending, etc. Military or Civilian?

www.AHRN.com

 

[NavyFlightDoc]

I have a home in San Antonio, Texas and will be moving to PA for three years for another residency. I've been following the thread and am trying to decide between renting and selling myself. I have a quick question. Does anyone know of any websites to post rental homes or homes for sale to Medical students, Residents, Attending, etc. Military or Civilian?

www.militarybyowner.com is a site with rental/sale homes, sometimes limited, but okay for bigger military areas.

 

[BOHICA-FIGMO]

I know this is not exactly on topic, but does anyone know good areas to live around Portsmouth, VA? I know about Suffolk and Chesapeake (good), central Portsmouth (bad), and anything across a bridge or tunnel (bad). Does anyone know about the Port Norfolk area? What about old town?

 

[NavyFlightDoc]

I know this is not exactly on topic, but does anyone know good areas to live around Portsmouth, VA? I know about Suffolk and Chesapeake (good), central Portsmouth (bad), and anything across a bridge or tunnel (bad). Does anyone know about the Port Norfolk area? What about old town?

there's a thread called "Sweet places to live in/near Portsmouth..." you've probably already found it.

 

[DogFaceMedic]

Hi,
Yes, one of my friends who is in the military was in the process of buying a home. He was seeking a lender for the home loan. That is when he discovered Military loans http://www.militaryloans.com/.They offer loans exclusively for military personnel. Military loans provided him with the best option at appropriate interest rates. And looking at the current scenario of the real estate market, I would avoid commenting on the profit margin that you would be able to get 3 years down the line. Good luck with your decision.

Looks like a salesman has invaded with his very first post. There is a whole industry of con-artists presenting themselves as pro-military with a lot of hidden fees and scams. The used-car lots around bases make a living stealing from soldiers.

USAA has been very good to me on purchases, not quite as competitive for refinance. There are also VA loans for less points and less down for first time buyers depending on years of service.

 

[bbawco1]

if anyone is coming to san antonio, pm me and I can give you a few good contacts/options.

 

[kjayquen]

Check with USAA early in your decision and if you use a real estate agent to help buy or sell your house who is registered with USAA you can get cash back at the back end of the transaction. Just another little bonus they throw to ya for doing such great things for your country.