[...]

[fa21212]

---

Members do not see this ad.

[...]

 

[snowcrawler85]

...

 

[Rachapkis]

The transaction costs of selling a house are substantial. As a med student, there is a decent chance that you will have to move for residency or your first job following residency. I would recommend against buying a house until your future is more predictable.

 

[wholeheartedly]

As a former home owner who desperately misses owning my own place... I still wouldn't buy unless very unique circumstances were involved (ie high income spouse, handy with repairs, large family, really good market, lots of residency programs, can afford to take a major financial hit, etc. <-----like need most of these not just a couple)

The time cost to manage and maintain is high and the risk of it biting you in the butt is high.

 

[MusicDOc124]

I considered it and almost did. I ended up transferring med schools after first year. Glad I didn't. You also need at least 4-5 years of ownership before selling to get past various things with the mortgage company, have it outweigh buying/selling costs, etc. Even with a home program, you don't know where you will end up for residency and it's not really a risk worth taking. You have to maintain it yourself which can potentially be very expensive and/or take time away from studying. Also, depending on your school, you may not know where you will be rotating. At no point as a student or resident, when time is sparse, do you want to be playing landlord either if you can avoid it. My .02.

 

[daw05]

I'm going to disagree with the above posts. I'm in the Army, and have spent no more than 4 years in any one place. I've bought 4 houses and sold 3, none of which I kept for more than 3 years. The cost benefit will change based on your location and your situation. Examples of factors to consider:
- Bigger family/ dogs are going to make finding a good house to rent more difficult or costly
- Mortgage is always going to be cheaper than rent in a comparable house
- There is an upfront cost for a house, but that is changed by what type of loan that you get. For a VA loan, these are relatively minimal. You also have an FHA loan available, which will mean that you don't put 20% down and will have to pay PMI
- Don't buy a house looking to make money (though I've sold each of mine spanning 8 years for at least some gain), do it to break even and better your situation
- Owning a house will have maintenance costs that you don't have with a rental. You have to consider these when buying, and make a smart decision on what house to buy

n=1, but in my case, for the school areas I'm looking, it makes sense. My wife is a Stay at home Mom, so this decision is coming from a place of what is smart financially for our family, not because we have excess money laying about.

 

[hamiltonnyc]

I'm going to disagree with the above posts. I'm in the Army, and have spent no more than 4 years in any one place. I've bought 4 houses and sold 3, none of which I kept for more than 3 years. The cost benefit will change based on your location and your situation. Examples of factors to consider:
- Bigger family/ dogs are going to make finding a good house to rent more difficult or costly
- Mortgage is always going to be cheaper than rent in a comparable house
- There is an upfront cost for a house, but that is changed by what type of loan that you get. For a VA loan, these are relatively minimal. You also have an FHA loan available, which will mean that you don't put 20% down and will have to pay PMI
- Don't buy a house looking to make money (though I've sold each of mine spanning 8 years for at least some gain), do it to break even and better your situation
- Owning a house will have maintenance costs that you don't have with a rental. You have to consider these when buying, and make a smart decision on what house to buy

n=1, but in my case, for the school areas I'm looking, it makes sense. My wife is a Stay at home Mom, so this decision is coming from a place of what is smart financially for our family, not because we have excess money laying about.

Congrats on the success. However, I'd be wary to try to replicate this because it's very specific. One, FHA loans can only be used one, and VA loans have obvious requirements. Also, most of us here do have to factor in finances for this consideration, with such a huge commitment. So the success within 8 years has to account market conditions. The market has steadily gone up in the last 8 years, and even if it stays stagnant (which I don't think it will), flipping houses every 3 or so years can be very costly.

I think if you are going to be in a location for 5+ years and are financially secure, it can be very rewarding. But there are a lot of financial risks if the above are not met.

 

[dpmd]

I'm going to disagree with the above posts. I'm in the Army, and have spent no more than 4 years in any one place. I've bought 4 houses and sold 3, none of which I kept for more than 3 years. The cost benefit will change based on your location and your situation. Examples of factors to consider:
- Bigger family/ dogs are going to make finding a good house to rent more difficult or costly
- Mortgage is always going to be cheaper than rent in a comparable house
- There is an upfront cost for a house, but that is changed by what type of loan that you get. For a VA loan, these are relatively minimal. You also have an FHA loan available, which will mean that you don't put 20% down and will have to pay PMI
- Don't buy a house looking to make money (though I've sold each of mine spanning 8 years for at least some gain), do it to break even and better your situation
- Owning a house will have maintenance costs that you don't have with a rental. You have to consider these when buying, and make a smart decision on what house to buy

n=1, but in my case, for the school areas I'm looking, it makes sense. My wife is a Stay at home Mom, so this decision is coming from a place of what is smart financially for our family, not because we have excess money laying about.

I am going to go out on a limb and guess you failed to factor some stuff in when you say you are better off having flipped through homes. Tip off is comparing rent with only mortgage when the costs of home ownership includes more than that so to properly compare you have to look at that too. You have to factor in stuff like the funding fee for the VA loan, closing costs you paid in cash, closing costs you financed, closing costs you paid for the sale, repairs you had to make, property taxes, excess insurance costs (over what you would pay as renters), excess utilities (over what you would have paid as a renter since some utilities might have been included). Doesn't mean that I think it is impossible you came out ahead, just that I know a lot of people think that if you sell a place for what you bought it for that you are automatically coming out even or even ahead since they "saved" all that rent money they would have paid.

 

[hamiltonnyc]

I am going to go out on a limb and guess you failed to factor some stuff in when you say you are better off having flipped through homes. Tip off is comparing rent with only mortgage when the costs of home ownership includes more than that so to properly compare you have to look at that too. You have to factor in stuff like the funding fee for the VA loan, closing costs you paid in cash, closing costs you financed, closing costs you paid for the sale, repairs you had to make, property taxes, excess insurance costs (over what you would pay as renters), excess utilities (over what you would have paid as a renter since some utilities might have been included). Doesn't mean that I think it is impossible you came out ahead, just that I know a lot of people think that if you sell a place for what you bought it for that you are automatically coming out even or even ahead since they "saved" all that rent money they would have paid.

I think even with those costs, I wouldn't be surprised if they came out ahead. But that's because of market conditions. All those costs you mentioned are real issues in a down or even stagnant housing market.

 

[dpmd]

I think even with those costs, I wouldn't be surprised if they came out ahead. But that's because of market conditions. All those costs you mentioned are real issues in a down or even stagnant housing market.

Yeah. Just pointing out that there is more to compare than rent versus what the mortgage would be. Not even getting into the opportunity cost that comes from putting money down (for those that can swing it) which requires so many assumptions it can hard to calculate accurately. Sometimes the risk is worthwhile due to nonfinancial considerations.

 

[DPTinthemaking15]

My wife and I currently own a home, and we were moments away from purchasing a cozy house for the Fall. We compared pros/cons and made a spreadsheet of issues we could foresee in the upcoming years. Tomorrow we are submitting papers to rent during school.

After realizing how much we would have to pay for a handy man, because I would be unable to fix things. It was a simple decision to rent instead of own. Good luck, OP.

 

[daw05]

I am going to go out on a limb and guess you failed to factor some stuff in when you say you are better off having flipped through homes. Tip off is comparing rent with only mortgage when the costs of home ownership includes more than that so to properly compare you have to look at that too. You have to factor in stuff like the funding fee for the VA loan, closing costs you paid in cash, closing costs you financed, closing costs you paid for the sale, repairs you had to make, property taxes, excess insurance costs (over what you would pay as renters), excess utilities (over what you would have paid as a renter since some utilities might have been included). Doesn't mean that I think it is impossible you came out ahead, just that I know a lot of people think that if you sell a place for what you bought it for that you are automatically coming out even or even ahead since they "saved" all that rent money they would have paid.

I personally am better off having purchased homes in each place. That isn't going to be the case for everyone. My second point (upfront costs) is where I mentioned funding fees, etc. Funding fee is 1.5% if you put 5% down. Let's say rent for an area is $2.2k for the houses we are looking at. Comparable homes sell for about $250K. Add in the rest of closing costs, and you're looking at about 18k upfront. That mortgage is going to be around $1700. $500*12*4= 24K. It's close enough to a wash, that I would prefer to pick out a house that I like than rent. Personal preference. There is, of course, more to factor in to the pro/cons when selling the house - most notably that the seller pays the realtor fees (6%), so you're looking at another 18k bill when you sell the house. That's where the market comes in. In the past, it's worked for us. Will the market continue to support that kind of growth? Who can guess. Again, I'm willing to front a few thousand $ loss to be able to pick where we live and not have to deal with a landlord. (also, I mentioned in my first post that you have to put in maintenance costs, as well - all these things add into a particular person's math).

My point is that it's different for everyone, and I advise the OP to take a good look at what the comparable costs will be and then make a decision comparing the costs to what they gain from an intangible perspective. I don't advise taking a hard stance that it is never worth it.

 

[NITRAS]

There are a lot of costs with home ownership other than the payment. The lifestyle bloat is real. There’s also the risk of not being able to sell at the end of it.

I’m not saying no one should ever buy, but most people are better off not. Money and margin really benefit home ownership....which most med students don’t have.

 

[dpmd]

There are a lot of costs with home ownership other than the payment. The lifestyle bloat is real. There’s also the risk of not being able to sell at the end of it.

I’m not saying no one should ever buy, but most people are better off not. Money and margin really benefit home ownership....which most med students don’t have.

That's what I was getting at. Just a small property tax of 2k takes his calculation of a 500 dollar "rent saved" to only 334 which puts him 2k in the hole before selling expenses come in.

 

[Ad2b]

I am hoping to buy if accepted simply because we have 5 dogs, 3 of which are giant breed and 2 that are hot dog types...

Owning is easier for me because of them and my son is with me and will likely attend whatever school that accepts me... so, financially, it makes a lot of sense as does our very particular lifestyle (no, they don't drool; yes, they are excellent dogs; yes, they are quiet; yes, they are lap dogs; NO they do NOT wear saddles)

 

[DOgdad23]

I am hoping to buy if accepted simply because we have 5 dogs, 3 of which are giant breed and 2 that are hot dog types...

Owning is easier for me because of them and my son is with me and will likely attend whatever school that accepts me... so, financially, it makes a lot of sense as does our very particular lifestyle (no, they don't drool; yes, they are excellent dogs; yes, they are quiet; yes, they are lap dogs; NO they do NOT wear saddles)

Same reason we are buying. We have 2 dogs (a South African mastiff and a husky) and 2 cats. Also have a couple chameleons and other stuff. We don’t want to deal with finding a place that allows pets and then paying $1200 in pet fees, $80+ in pet rent, on top of a deposit.

A lot of people are doggin on buying a house, but it’s not ALL doom and gloom. I’m very fortunate to have a wife that is a clinical pharmacist and has a great salary. Also, UMB bank includes pharmacists in their doctor Loan program. We were approved for $400,000 (not spending that much!) with 0% down and no PMI. Fixed 30 year rate of 4.625%. We are also offering the owners above asking price for the house so that they will pay our closing costs and, in a round about way, roll our closing costs into our loan. We will be in a large metropolitan area and there are a lot of residencies. If I don’t match there it is no big deal, we will sell the home. If we can’t sell, then we’ll advertise to medical students to rent. And even if that falls through, between my residency salary and her [current] salary, we’ll be making >$200,000, so we’ll survive.

 

[dpmd]

Same reason we are buying. We have 2 dogs (a South African mastiff and a husky) and 2 cats. Also have a couple chameleons and other stuff. We don’t want to deal with finding a place that allows pets and then paying $1200 in pet fees, $80+ in pet rent, on top of a deposit.

A lot of people are doggin on buying a house, but it’s not ALL doom and gloom. I’m very fortunate to have a wife that is a clinical pharmacist and has a great salary. Also, UMB bank includes pharmacists in their doctor Loan program. We were approved for $400,000 (not spending that much!) with 0% down and no PMI. Fixed 30 year rate of 4.625%. We are also offering the owners above asking price for the house so that they will pay our closing costs and, in a round about way, roll our closing costs into our loan. We will be in a large metropolitan area and there are a lot of residencies. If I don’t match there it is no big deal, we will sell the home. If we can’t sell, then we’ll advertise to medical students to rent. And even if that falls through, between my residency salary and her [current] salary, we’ll be making >$200,000, so we’ll survive.

This is a very different situation than most folks. That is why caution is generally advised. If the economic or noneconomic benefits outweigh the risks, fine. But people have to know the risks to properly decide. But your decision to spend less than you qualify for and being able to make the payments if unable to sell makes the risks a lot less.

 

[BC_89]

Same reason we are buying. We have 2 dogs (a South African mastiff and a husky) and 2 cats. Also have a couple chameleons and other stuff. We don’t want to deal with finding a place that allows pets and then paying $1200 in pet fees, $80+ in pet rent, on top of a deposit.

A lot of people are doggin on buying a house, but it’s not ALL doom and gloom. I’m very fortunate to have a wife that is a clinical pharmacist and has a great salary. Also, UMB bank includes pharmacists in their doctor Loan program. We were approved for $400,000 (not spending that much!) with 0% down and no PMI. Fixed 30 year rate of 4.625%. We are also offering the owners above asking price for the house so that they will pay our closing costs and, in a round about way, roll our closing costs into our loan. We will be in a large metropolitan area and there are a lot of residencies. If I don’t match there it is no big deal, we will sell the home. If we can’t sell, then we’ll advertise to medical students to rent. And even if that falls through, between my residency salary and her [current] salary, we’ll be making >$200,000, so we’ll survive.

I’d say first: congrats on the primary plan. That actually sounds like a lower risk factor has played in your favor.

With that, this is definitely the exception though..not the rule. I’ve been very tempted myself to utilize the VA home loan (0% down with no pmi) while starting my program (being covered by my GI Bill Benefits so no out of cost for school). Still, that future unknown of Murphy’s Law creeps under my skin...The thought still comes to me of taking the risk for much lower payments during school and pocketing the difference for another future investment.

 

[DOgdad23]

I’d say first: congrats on the primary plan. That actually sounds like a lower risk factor has played in your favor.

With that, this is definitely the exception though..not the rule. I’ve been very tempted myself to utilize the VA home loan (0% down with no pmi) while starting my program (being covered by my GI Bill Benefits so no out of cost for school). Still, that future unknown of Murphy’s Law creeps under my skin...The thought still comes to me of taking the risk for much lower payments during school and pocketing the difference for another future investment.

I completely agree that my circumstances are extenuating. I also think that an individual should have a good reason for buying a house. “Because I want one” isn’t really a great excuse while you’re in medical school. Having a family, wanting to live in a specific school district, multiple animals, etc could be a valid reason. Aside from our animals, our thought process was why put ~$70,000 into someone else’s pocket over 4 years, when we could potentially build some of our own equity for a little bit more risk. We are also buying <10 years old to hopefully eliminate some of the risks with repairs.

 

[Ad2b]

I'd also add that I am not a traditional applicant that is in my 20's... large down payment on smaller house = less for mortgage and insurance than rent alone.

Plus, there might be a med student who needs a place to live and maybe we can rent out a room (as long as they like dogs that do not wear saddles or drool but do like being lap dogs 😀 )

 

[dpmd]

I'd also add that I am not a traditional applicant that is in my 20's... large down payment on smaller house = less for mortgage and insurance than rent alone.

Plus, there might be a med student who needs a place to live and maybe we can rent out a room (as long as they like dogs that do not wear saddles or drool but do like being lap dogs 😀 )

We bought a condo during med school (was during a down period in the market and we bought from a divorcing couple in bankruptcy so got it cheap) and rented out the other room for a while. But my husband earns good money so i knew we would be able to keep it after graduating. It is a profitable rental now but wasn't always and the home value has fluctuated a bit so I am not at all certain it would have been a good investment if we had to sell after graduation.

 

[Stagg737]

Any non-trad students here plan on buying a house instead of renting while in medical school?

Was a (semi) non-trad with a decent amount saved up before med school. Ended up renting and putting that money towards tuition instead of trying to buy. Very glad we went that route as renting was a lot simpler and gave us the ability to move around the city when my wife's job location shifted. Plus there's a lot less in loans I had to get and that interest won't be racking up.

General rule of thumb is that buying in med school is a bad idea. Buying in residency can be good depending on how long residency is and whether you're planning to stay and work. There's always exceptions, but for most it's just a bad idea.

 

[dpmd]

Was a (semi) non-trad with a decent amount saved up before med school. Ended up renting and putting that money towards tuition instead of trying to buy. Very glad we went that route as renting was a lot simpler and gave us the ability to move around the city when my wife's job location shifted. Plus there's a lot less in loans I had to get and that interest won't be racking up.

General rule of thumb is that buying in med school is a bad idea. Buying in residency can be good depending on how long residency is and whether you're planning to stay and work. There's always exceptions, but for most it's just a bad idea.

Don't forget the origination fees on the student loans you didn't have to pay.

 

[medschoolonthemind]

We bought a duplex. Early days yet, but I don't regret it. Also negotiated for seller to pay closing costs. FHA loan for a major fixer upper. We will have substantial equity once reno is done, though that is taking much longer than expected. They say you can have two of three: fast, affordable and quality. We chose the later two.

It has definitely been a steep learning curve and we lucked out with our contractor. I did a lot of the work (finding the house, FHA craziness, finding our contractor) the summer before school started and my husband has been at the frontlines since.

I think having the responsibilities of being a landlord (shared with my husband) will we well worth the financial and lifestyle gains.

 

[dpmd]

We bought a duplex. Early days yet, but I don't regret it. Also negotiated for seller to pay closing costs. FHA loan for a major fixer upper. We will have substantial equity once reno is done, though that is taking much longer than expected. They say you can have two of three: fast, affordable and quality. We chose the later two.

It has definitely been a steep learning curve and we lucked out with our contractor. I did a lot of the work (finding the house, FHA craziness, finding our contractor) the summer before school started and my husband has been at the frontlines since.

I think having the responsibilities of being a landlord (shared with my husband) will we well worth the financial and lifestyle gains.

Renting to other students, not necessarily your classmates has worked out well for us. Grad students don't tend to be loud and they usually pay on time.

 

[Matthew9Thirtyfive]

I'm going to disagree with the above posts. I'm in the Army, and have spent no more than 4 years in any one place. I've bought 4 houses and sold 3, none of which I kept for more than 3 years. The cost benefit will change based on your location and your situation. Examples of factors to consider:
- Bigger family/ dogs are going to make finding a good house to rent more difficult or costly
- Mortgage is always going to be cheaper than rent in a comparable house
- There is an upfront cost for a house, but that is changed by what type of loan that you get. For a VA loan, these are relatively minimal. You also have an FHA loan available, which will mean that you don't put 20% down and will have to pay PMI
- Don't buy a house looking to make money (though I've sold each of mine spanning 8 years for at least some gain), do it to break even and better your situation
- Owning a house will have maintenance costs that you don't have with a rental. You have to consider these when buying, and make a smart decision on what house to buy

n=1, but in my case, for the school areas I'm looking, it makes sense. My wife is a Stay at home Mom, so this decision is coming from a place of what is smart financially for our family, not because we have excess money laying about.

I would be very hesitant to buy while active duty. I am in the Navy and have not lived in one place for more than 2 years. I have had many, many junior and senior guys buy houses and regret it because they couldn't get rid of them when they had to move, or it forced them to turn down orders to places they wanted to go because they couldn't get rid of their house and couldn't afford to have two. Or, even worse, they tried to rent it out, and now they're paying two mortgages because they can't get anyone to rent it.

I would also say it is risky to buy while in medical school for the same reasons (and others that have been pointed out). I personally have only rented, and I am extremely glad I did. I have had none of the headaches my friends who bought have had, and literally all of them have had headaches.

The VA loan also can end up costing you as much or more than a traditional mortgage, btw.

 

[dpmd]

I would be very hesitant to buy while active duty. I am in the Navy and have not lived in one place for more than 2 years. I have had many, many junior and senior guys buy houses and regret it because they couldn't get rid of them when they had to move, or it forced them to turn down orders to places they wanted to go because they couldn't get rid of their house and couldn't afford to have two. Or, even worse, they tried to rent it out, and now they're paying two mortgages because they can't get anyone to rent it.

I would also say it is risky to buy while in medical school for the same reasons (and others that have been pointed out). I personally have only rented, and I am extremely glad I did. I have had none of the headaches my friends who bought have had, and literally all of them have had headaches.

The VA loan also can end up costing you as much or more than a traditional mortgage, btw.

Between the funding fee and the higher than it could have been rate it was certainly cheaper for me to do a traditional loan (had a down payment and good credit). Didn't compare it with my prior FHA loan because my realtor said that offers with va loans were being denied frequently.

 

[Matthew9Thirtyfive]

Between the funding fee and the higher than it could have been rate it was certainly cheaper for me to do a traditional loan (had a down payment and good credit). Didn't compare it with my prior FHA loan because my realtor said that offers with va loans were being denied frequently.

Yeah, not that I would have bought a house while I'm still in anyway, but my financial advisor strongly recommended against it. His advice was to save as much as possible while in, and then once I'm out and want to buy, put as large a down payment down as possible.

 

[daw05]

I get it, everyone has divergent opinions on whether renting or buying is a better financial decision based on a particular situation. I agree with that.

What I don't understand is the comments through this post positing that the various costs of my personal housing decisions (buying) yielded me a net loss, when they didn't. I understand the hidden costs of buying, maintaining, and selling a house, the costs associated with FHA, traditional, and VA loans (I've done all three). I fully understand that the net evaluation is based on much more than just the mortgage payment/rent payment ratio. I can say, unequivocally, I have profited from the sale of each of my houses. Even if I hadn't, I still would have bought for all of the non-monetary reasons to do so (dogs, family, choice of place to live, personal preference, etc.)

Between the funding fee and the higher than it could have been rate it was certainly cheaper for me to do a traditional loan (had a down payment and good credit). Didn't compare it with my prior FHA loan because my realtor said that offers with va loans were being denied frequently.

VA loans are typically a lower rate than traditional, both in rate and APR

Yeah, not that I would have bought a house while I'm still in anyway, but my financial advisor strongly recommended against it. His advice was to save as much as possible while in, and then once I'm out and want to buy, put as large a down payment down as possible.

Personal opinion, this isn't the best of advice. You are paying about 4% interest on a mortgage loan. Do you think your investments with that money would make more than 4%? That's the opportunity cost of tying up your funds in a mortgage. Great advice in 1989 when mortgage rates were 11%, less so now. This may change as rates continue to rise, but the threshold is probably around 6%