5/1 ARM vs. 7/1 ARM vs. 15 year fixed mortgage

[anencephalic]

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For all of you out there (resident or otherwise) with mortgages, what kind of mortgages did you end up going with?

First off, let me say that I'm a total n00b when it comes to mortgages.

It seems that with a 4 years combined AP/CP being with the possibility of a fellowship (excluding neuropath), a 5/1 ARM would almost be ideal (again, presuming I'll be an academic inbreed and stay at my program for fellowship training).

Any thoughts or suggestions? I skimmed the finances forum but wanted the opinion of my future colleagues...😀

 

[b&ierstiefel]

I ended up going with a 7/1 ARM.

A 5/1 ARM would give you the lowest interest rate but gives you the least amount of flexibility. But that's not the end of the world...you could always try to re-finance your loan (although I've heard stories of that being a pain in the ass).

One piece of advice...check into the trend of the housing market. Are the property values down-trending? up-trending?

I will tell you that in the case of Boston...I stupidly bought at the peak of the housing market as the property values are at a low right now...great time to buy here!

For all of you out there (resident or otherwise) with mortgages, what kind of mortgages did you end up going with?

First off, let me say that I'm a total n00b when it comes to mortgages.

It seems that with a 4 years combined AP/CP being with the possibility of a fellowship (excluding neuropath), a 5/1 ARM would almost be ideal (again, presuming I'll be an academic inbreed and stay at my program for fellowship training).

Any thoughts or suggestions? I skimmed the finances forum but wanted the opinion of my future colleagues...😀

 

[veo1]

It seems like buying is the new trend for residents these days, even single/non-married ones. I seem to be in a minority of ppl that just want to rent! I'm curious, is 4yrs long enough to earn equity and not take a loss on buying?

 

[l&usibari]

I used a 5/1 ARM when I purchased the house I am living in through residency. I figure residency is 4 years, so with a 5/1 I have a one year buffer. I ended up being able to buy a nicer house than I might otherwise have been able to afford, since my rate is lower. I intend to sell before the 5 years is up when I move away for either fellowship or a job.

 

[anencephalic]

I used a 5/1 ARM when I purchased the house I am living in through residency. I figure residency is 4 years, so with a 5/1 I have a one year buffer. I ended up being able to buy a nicer house than I might otherwise have been able to afford, since my rate is lower. I intend to sell before the 5 years is up when I move away for either fellowship or a job.

I thought about this too, but wondered how much "buffer" there would be should I choose to do a fellowship at the same place I do my residency...I'd also hate to move for one year and try and deal with housing for my family for that short period of time.

 

[RyMcQ]

I thought about this too, but wondered how much "buffer" there would be should I choose to do a fellowship at the same place I do my residency...I'd also hate to move for one year and try and deal with housing for my family for that short period of time.

Go with the 5/1 ARM. There is usually a cap for how much the rate can go up after the five years, so if you stayed for six years, it would likely not kill you. If the rates are unfavorable after the 5 years are up, you could always refinance with a 1/1 or 3/1 ARM with a lower rate. Refinancing is easy and often gives you a month in which you don't make a mortgage payment. (You don't save that money, because it is rolled into the new loan.)

My other opinion is that if you buy a house that is in a good location for an academic center, the property will likely keep its value.

I had two houses and 5 mortgages during my training. I made more money in appreciation than I paid in interest. (And the interest was a big tax deduction.)

 

[anencephalic]

Sweet...thanks RyMcQ!

 

[yaah]

You should post this in the finances forum.

 

[Boopieness]

One of my fellow path residents (who is married to IM resident) recently bought a house with no money down. Through Bank of America. (& 1/2 percentage point lower then the going rate with no PMI) -via their "doctor loan." They were able to afford more house on their meager resident salaries.
They have their school loans in deferment and owe 550K in school loans together. I couldn't believe it.

 

[yaah]

I recommend going to this thread

http://forums.studentdoctor.net/showthread.php?t=176866

Which is very long but has lots of helpful info in it.

I am going to close this thread because there is more info there.