Buying a home in residency

[Reveler]

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Having been lucky enough to match at my top program, I am now thinking about how to make a successful move to my new city. My wife and I are thinking of purchasing a home, as the rental market is tight in this medium-sized Midwestern city and comparable rentals seem to be much more expansive than "simply" buying. Any advice from people who have successfully done this would be greatly appreciated! How did you go about securing a physician loan? Did the program's GME office connect you with real estate agents or loan officers? Did you set up showings and then fly in to view the homes? Is it even possible (however ridiculous) to buy a home sight unseen? How long did it take to close once an offer was accepted? When did you start looking at homes? Etc, etc!

Any advice would be greatly appreciated!

 

[doc05]

How many years is your residency? Unless it's 5 or more, buying isn't financially sensible.

Also physician loans are not very favorable.

 

[VA Hopeful Dr]

How many years is your residency? Unless it's 5 or more, buying isn't financially sensible.

Also physician loans are not very favorable.

Not always true. I bought a house for my 3 year residency. Sold it for 30% more than I paid for it after those 3 years with the only thing we did to the house being install a chain link fence.

Also, elaborate on why you dislike physician loans. We've used them twice and been very satisfied with them.

 

[nlax30]

We bought around the time I started residency. I knew I was going to be in the same area for 6+ years due to residency/fellowship so we weren't worried about the timeframe.

For us the only way we could get a loan was through a physician mortgage just due to my income/debt ratio at that time. Some of the major banks have them (suntrust, Fifth Third, etc...) or you can ask around and see if a private lender can put together a deal for you.

Obviously home ownership has it's ups and downs. We have young kids so wanted the space for them but we've had to replace both AC units, do some other random repairs and in general just general house maintenance that can add up, not just money-wise but time-wise which is certainly valuable when you're in training.

 

[AdmiralChz]

At my 4 year program, people had varying success of very satisfied to full regret about buying a house. Making generalizations is difficult here as the housing market is so different between areas.

Probably the best bet is to contact some residents in your program to see what their experience has been, particularly those that own a home. They can give you mor targeted advice.

 

[wysdoc]

Having been lucky enough to match at my top program, I am now thinking about how to make a successful move to my new city. My wife and I are thinking of purchasing a home, as the rental market is tight in this medium-sized Midwestern city and comparable rentals seem to be much more expansive than "simply" buying. Any advice from people who have successfully done this would be greatly appreciated! How did you go about securing a physician loan? Did the program's GME office connect you with real estate agents or loan officers? Did you set up showings and then fly in to view the homes? Is it even possible (however ridiculous) to buy a home sight unseen? How long did it take to close once an offer was accepted? When did you start looking at homes? Etc, etc!

Any advice would be greatly appreciated!

If you want to buy a house, please don't do it "sight unseen"! Like you, I have looked for housing in areas where the rental market was minimal but buying a home made sense, as the mortgage payment was less than the market rent rate. I sent you a PM.

 

[AMEHigh]

I would definitely rent for 6 months in your new town before buying anything. That's advice I give to anyone who is moving to a new city. It can obviously be done, but as someone who has moved 15+ times it's always desirable to know the city a little better before making more of a permanent decision in regards to living.

I just bought a house last year during residency with my boyfriend. I inquired about a physician loan, but in the end it was better to just get a regular loan. Having a good loan officer was very helpful, we got a recommendation from a friend.

 

[TraumaLlamaMD]

I’d get in touch with your program coordinator - he or she may have a relationship with local real estate agents who can help you find homes in areas that are popular with residents.

I do agree with the above advice to rent for a little while first, so you can get an idea of which areas are most suitable to your needs.

 

[Doctor Christmas]

Having been lucky enough to match at my top program, I am now thinking about how to make a successful move to my new city. My wife and I are thinking of purchasing a home, as the rental market is tight in this medium-sized Midwestern city and comparable rentals seem to be much more expansive than "simply" buying. Any advice from people who have successfully done this would be greatly appreciated! How did you go about securing a physician loan? Did the program's GME office connect you with real estate agents or loan officers? Did you set up showings and then fly in to view the homes? Is it even possible (however ridiculous) to buy a home sight unseen? How long did it take to close once an offer was accepted? When did you start looking at homes? Etc, etc!

Any advice would be greatly appreciated!

I bought a house during residency, lived in it for about 3 years, hoping to sell soon. I would agree with one of the posters above regarding the unfavorability of the physician loans - did not work for us. Tried going through Bank of America, they suck big time - don't recommend going through them. I would not buy a house unseen. I would rent for maybe 6mo-1 year and look like you are there. I would be surprised if the GME/program coordinator were able to help you with this. That's outside the realm of their duties. I would suggest perhaps looking online at realtors in the area and perhaps providing your desired specs so that they can start looking for you. Summer is a good time to buy. Perhaps moving into the area a month or two before residency and starting to look in the area would not be a bad idea either.

 

[clutch21]

The quality of physician loans also depends on the area. I bought in a smaller city with a very low cost of living. Most residents buy where I'm at buy given how dirt cheap housing is. A local bank offers an amazing physician loan: Lower interest rate than conventional (<4%), nothing down, and no PMI. Only catch it's a 7:1 ARM. Make sure you explore local loan options.

Usually you can talk to current residents to figure out where is good to live/buy if you don't want to move twice. +1 on not buying a house sight unseen. There are other factors such as neighborhood, surrounding houses, etc that you just have to see in person prior to making that kind of investment.

 

[Acoustic]

If you’re worried about the financial cost of buying I’d suggest using this:

Is It Better to Rent or Buy?

You can change a lot of details even including how long you will live there. The thought that rent is “throwing your money away” while paying a mortgage keeps the money with you is misleading but this tool can help you make that decision for yourself based on local market factors.

 

[Mehd School]

I'm right there with you OP. My city's rental market is atrocious. $1700-2000 a month will get you a garbage house in a garbage neighborhood. We'll gross $105k next year between my wife and I, and are hoping to be approved for a max budget of $260k. This will give us a mortgage of $1000-1100 a month. After taxes and insurance probably $1500-1600. But you can get a great house for $225-250k in the 'burbs. We prefer the 'burbs.

Everywhere I read says "Don't buy a house in residency and DON'T get a physicians loan unless you are in THIS specific situation!". Well, we are exactly in that situation. Going to be in that area for ~6 years, don't have a lot to put down, and don't want to throw cash in the garbage every month on rent. Also having a baby in May so I refuse to live in a bad neighborhood.

 

[Keona]

I'm right there with you OP. My city's rental market is atrocious. $1700-2000 a month will get you a garbage house in a garbage neighborhood. We'll gross $105k next year between my wife and I, and are hoping to be approved for a max budget of $260k. This will give us a mortgage of $1000-1100 a month. After taxes and insurance probably $1500-1600. But you can get a great house for $225-250k in the 'burbs. We prefer the 'burbs.

Everywhere I read says "Don't buy a house in residency and DON'T get a physicians loan unless you are in THIS specific situation!". Well, we are exactly in that situation. Going to be in that area for ~6 years, don't have a lot to put down, and don't want to throw cash in the garbage every month on rent. Also having a baby in May so I refuse to live in a bad neighborhood.

Check into banks that will give you a doctor loan, we have one and it made nicer house during residency possible.

 

[Mehd School]

Check into banks that will give you a doctor loan, we have one and it made nicer house during residency possible.

A popular physician's loan website put me in touch with someone at Bank of America today. I'm a little hesitant to go with them, so I'm going to look into smaller, local banks to the city I'm training in.

That's good to know though, thank you.

 

[VA Hopeful Dr]

A popular physician's loan website put me in touch with someone at Bank of America today. I'm a little hesitant to go with them, so I'm going to look into smaller, local banks to the city I'm training in.

That's good to know though, thank you.

We've used SunTrust twice and had great experiences both times.

 

[Mehd School]

We've used SunTrust twice and had great experiences both times.

If this: The Doctor Mortgage Loan | The White Coat Investor - Investing And Personal Finance for Doctors

is up to date then SunTrust isn't available in my state unfortunately.

 

[Doctor Christmas]

A popular physician's loan website put me in touch with someone at Bank of America today. I'm a little hesitant to go with them, so I'm going to look into smaller, local banks to the city I'm training in.

That's good to know though, thank you.

Don't do bank of america. They are jerks and a nightmare. Same experience has been had by a fellow resident in my program.

 

[DokterMom]

SHOP your loans! You'll be amazed at the variation between different companies. I'd echo the + on Sun Trust and the thumbs down on B of A.

Do factor in the length of your residency program, the age of the local housing stock and your ability/proclivity for routine home maintenance. You won't have much time to fix things... Do also check with your future co-residents. Odds are decent that some will be selling about the time you want to buy or will be able to recommend a good realtor.

 

[Reveler]

I was talking to a friend about whether or not physician loans will allow you to roll closing costs into the total amount of the loan. Does anyone know if this is true? Most of the appeal of PLs is the potential for 0% down, so having to come up with 2-5% at the time of closing after incurring other cross-country moving costs may be tough.

 

[WingedOx]

If you don't mind saying which Midwestern city, it likely makes a difference depending on what the housing market looks like there.

Here in Chicago, I came really close to grabbing a short sale condo in a rapidly gentrifying neighborhood but ultimately decided against it. I potentially would have come out WAY ahead on the deal by today, but there were a lot of things that could have potentially gone wrong in home ownership and I was worried about having additional cash on hand in the case of something going wrong with the condo. I got lucky and later married someone who owned a short sale condo in another rapidly gentrifying neighborhood on the other end of the city, so no harm no foul. A number of residents did own in my program, but nearly all of them were either going off two incomes or had some mommy/daddy money to support the purchase.

 

[DokterMom]

I was talking to a friend about whether or not physician loans will allow you to roll closing costs into the total amount of the loan. Does anyone know if this is true? Most of the appeal of PLs is the potential for 0% down, so having to come up with 2-5% at the time of closing after incurring other cross-country moving costs may be tough.

Some loans will allow you to roll in closing costs, but you'll pay for that flexibility... I'd have to suggest that if you can't come up with $20K or so, you're probably not in a good position to buy anyway. There are so many unanticipated expenses involved in buying a home and that $20K will disappear very quickly. Of course, moving and renting involve a lot of expenses also, so...

 

[operaman]

Lots of good advice above. I would second the NYTimes calculator above as well as the idea of renting for awhile so you can get to know the town before buying. I've always been wary of the stories of people who make a killing on a home buy. While these do happen, there's a HUGE reporting bias in that people who lost money or barely broke even aren't as eager to share their story. It makes it start to appear like it's easy guaranteed money which simply isn't true. As in all things, do your due diligence.

 

[Reveler]

Some loans will allow you to roll in closing costs, but you'll pay for that flexibility... I'd have to suggest that if you can't come up with $20K or so, you're probably not in a good position to buy anyway. There are so many unanticipated expenses involved in buying a home and that $20K will disappear very quickly. Of course, moving and renting involve a lot of expenses also, so...

We have that money set aside specifically for those unanticipated costs. We could come up with closing costs but that would thin out our buffer, which we would rather maintain after undertaking such a large move.

 

[mimelim]

We bought in May before starting in July for intern year. 7 year residency, found an agent who worked almost exclusively with young professionals (~20% of his clients were physicians <5 years out from medical school). Very happy we bought when we did, I'm coming to the end of my residency soonish. Now deciding whether we are keeping it as a rental property or selling it.