Anyone buying a condo?

[Brand]

I've been looking into buying a condo while in school for the next four years. Anyone else doing this as well? And for those who have done it, what is the best way to get financing?

I know that at some of the interviews I went to many of the students giving the tour had done this and said it was a great idea for us D1's to look into. My only question, how does a student get a loan for 100k+? Any ideas?

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[Supernumerary]

Go to lendingtree.com or jsut to your local bank. They'll be more than happy to help you through the process. If you have good credit and at least a few thousand for a down payment, you really shouldn't have a problem getting a mortgage.

I bought a home about two yrs. ago in the city where I'll be attending dental school. It was a little bit of a fixer upper so it was pretty cheap for the area, but I come from a farming/construction type family and had it looking good pretty quick. When I graduate, I will have almost as much equity in the home as I will have debt from dental school.

I realize I just got lucky in falling into this situation, but in general, I think buying a home or condo is a good idea. You can even look at getting a 2-3 bedroom and having roommates foot the bill for the mortgage. Jsut do some research.

 

[DesiDentist]

I was looking at condos in the beginning, and i saw a couple about 5-6 blocks from school. It was a good price, but the association (condo) fees of the unit were astronomical. It was $500 bucks a month just for the association fee, plus mortgage, plus utilities, i would be oweing close to 1000 bucks a month. I would definately will be building value over the four years, but paying $500 for just the association fee was a hearbreak. I'm paying $540 a month for rent. I live a block away from school. I don't have to worry about maintenance, or breaking anything.

DesiDentist

 

[3rdMolarRoller]

I'm thinking of doing the same but before I look at the properties I put in the values in the spreadsheet I made on the webpage below to see if its worth investing.

Most likely you will be getting a 2+ bedroom place, therefore you could rent out the additonal rooms to other students.

For the spreadsheet:

Values in green are the variable values you change

Values in red are you yearly cash flows and if its in brackets then it means its a negative value. Don't let a negative value scare you bec if you think about it all the rent you would have been paying is out the window anyway.

Values in yellow are your internal rates of return on the investment

The vale in pink is your profit or loss after you sell the place in year five should you elect to do so.

If you need anymore help just post on here instead of PM so that everyone else could see it.

http://brocnizer2007.012webpages.com

 

[Brand]

I just contacted an old friend who is a banker now. Financing is no problem. As long as your credit is solid you can easily get a loan for 150k+. Sweet! Looks like I'll have a condo rather than renting. Since I'm married with a kid rent in Ann Arbor is ~$1000 a month. I can buy a condo(including taxes and fees) for about the same amount. Sounds like a deal.

Anyone know of any downsides to buying rather than renting while in dental school? I'm thinking the gains outweigh the risks. Any thoughts?

 

[LetMeIn]

I was thinking of buying a house in Philly in July...

 

[NewNameForGoogleBot]

Will owning a home affect your eligibility for stafford loans? I have enough money saved for a condo down payment and the first few years of school, but what if I want to take out a loan for the last year or two?

 

[smile_doctor]

I've worked in the mortgage industry for 5 years now. One thing that you should know is that if you do not have a stable income/ work history for the past 2 years, you may encounter trouble getting a mortgage. In approving mortgage loans, we consider the stability and continuance of the income source that will be used to repay the loan. Furthermore, we relate the amount of home that one can afford to the income picture at the time of underwriting (remember we are looking for income that will continue to be received). A good rule of thumb is that one can usually afford a home that is roughly 3 times their annual income. (We actually calculate a housing and debt ratio to qualify a buyer, but I'll spare you the details). You also need to make sure that you have a good credit history and some assets for downpayment and reserves.

In short, if your income/employment stability and credit history doesn't look good, you may need to have a co-signer (parent or spouse) who has a strong income/asset/employment/credit history.

If you're not using a co-signer, don't buy more house than you'll be able to afford. Roommates are great, but I would not recommend having to totally rely on a roommate to make your mortgage payment. I would choose a home that you can afford by yourself in case you have to. Foreclosure is a very real consequence. It ruins your credit and impacts your ability to get other types of loans later (car, business, student loans).

Try to maintain a homeowner's warranty if you can afford it. This will help you cover expenses in case any of your major operating systems in the house (heating/air, etc.) fail. Also keep some cash reserves set aside to take care of any other maintenance needs that can (and will) arise.

Hope this helps!

 

[3rdMolarRoller]

Good call Smile_doctor!!!

As for the homeowners warrenty...best thing you could get. I pay $275 a year and it fixes any thing free of charge...including a whole new ac unit should it fail and not be repairable.

So that was a really good piece of advice.

 

[PashaJ]

On a similar note, when the schools hand out the checks for living expenses in the beginning of the year, is anyone else planning on investing the money in some form? For example your living expenses per month is 1000 and you have a check for 12,000, would you or are you going to say put 6,000 in a 6 month CD since you will not need it? It would be the smart thing to do.

I'm afraid that with Foxwoods about 1 hour out of Boston, I'll be investing a lot in the Native American stock. Double down on 11!

 

[ibo man]

Pashaj,
If you want to get a nice returns on your investment at the Native American Stock. What ever you do don't double down against a face card or an ace. just kidding. I had to say that.

 

[dentalfreak]

My wife and I will be building a new house in Louisville. 1600 sq feet, 3 bedrooms, 2 baths, 2 car garage and it is all brick for $118,00. This is one of the main reason we picked Louisville because one can build a house for so cheap. I asked my financial advisor and she said that a mortgage would not affect my student loans, in fact she said if I can qualify for a house, I should have no problem with student loans ( health professional loans). The stafford loans are not based on credit, but on need.

 

[sdca777]

Smile-doctor,
Can't you get a no documentation loan if you put down 10%. will the interst rate be too high?

 

[Brand]

Smile-doctor's post makes it seem very difficult. Since I looked into it I found that that is not the case. I haven't worked for 1 1/2 years and my wife works at a $10/hr job. We got approved for a $140k condo at an interest rate of 5.74%. Nothing down. Look into it. Banks WANT to give you money. Of course my wife and I both have very good credit 757 and 799 if that means anything.

 

[smile_doctor]

First time homebuyers can get a no doc loan with 10% down and credit scores near 700. Prior homeowners can get no doc loans with only 5% down with the same credit score. There are hundreds of different loan products to fit borrowers of almost any type. Each of these loans have different downpayment, credit score, and documentation requirements. As such, each carry different interest rates. No doc loans carry higher interest rates than "full" doc loans as the former represent a higher risk to the bank. No doc means that no income, asset, or employment information is being verified.

Brand:
I never said that it was "difficult" to get a mortgage loan, but saying that the banks WANT to give away money is a little misleading. You would be more correct in saying that banks want to lend money to credit worthy borrowers. Both you and your wife have excellent credit scores which, to a bank, indicates that you are a good credit risk. I've seen thousands of credit reports and have lended millions of dollars over the course of my career. I assure you that the majority of the population do not fall into the "low risk" category that your scores put you in. I can not comment on the type of loan you have been approved for without knowing all of the factors being considered, but I am curious as to how they are qualifying you for a payment of approximately $1000+/month (depending on how much your taxes, HOA fees, and any mortgage insurance runs you) based on no income for you and only $10/hr for your wife. Banks do not count student loans as income (quite oppositely, they are debts). In any case, make sure you know what you are getting.

I do not want to discourage anyone from buying a home. Real estate is probably one of the wisest places to invest your money given the current state of the economy. I am in the process of finding a home in Baltimore to purchase for myself. I just wanted to offer some insight for those who are unfamiliar with mortgage financing. It's definitely not a "sign and drive" process.

 

[tinker bell]

As long as you live in the house that you own, the house will not affect the loans at all.

I would love to own a piece of property on Parnassus hill. But lord knows that it is too expensive, even a newly grad dentist can't afford it around here, I think. So, I will just rent for now. However, I'll keep my eyes out for any good looking properties around the school. I think real estate investment is the wisest one. I bought a condo to live at Davis when I started there, and sold it for almost double the price (when the market was real sizzling in 2001). So, I strongly encourage you guys to buy, if you can find good property near your school.

And don't think of having extra money. There will always be extra thing coming up. For example, you will soon realize that you want a loops, etc, etc....Then you want an extra book. So, embrace your cash.....It will serve you right.