Buying a House vs. Renting

[quakinator]

---

Members do not see this ad.

How do you purchase a house in dental school? I'm assuming none of you are working and don't have wives that are making bunches of money...right? Curious, just wondering how the process works.

I know you normally take out a loan, but normally a bank also wants to know you will be able to make the payments. If you have no income, how do you show the banks that you will not default? Do they take into consideration your loans that you will get for dental school as "income"? Just wondering for those that have purchased homes, how did you prove your ability to make the payments?

To those of you that have purchased homes, has purchasing a home allowed you to get in-state tuition?

Information on how the situation worked for you would be very much appreciated. Thanks

 

[demonicr]

well its difficult to prove to the bank that you will make your monthly morgage payments by being in dental school and living off of loans. and yes they do take into consideration that the loans you take out for living is income. what you would need is a down payment. it is very difficult to get a morgage loan with zero down. i guess this is where your parents or money you been saving up for a while comes into play.

 

[JavadiCavity]

well its difficult to prove to the bank that you will make your monthly morgage payments by being in dental school and living off of loans. and yes they do take into consideration that the loans you take out for living is income. what you would need is a down payment. it is very difficult to get a morgage loan with zero down. i guess this is where your parents or money you been saving up for a while comes into play.

Actually, it's not difficult at all to get a loan with zero down. Most, if not all mortgage brokers have an handful of zero down programs for you to choose from. In fact, the rates are just as good as if you paid 20% down. Just don't go to a bank! Banks are VERY conservative and will be very difficult for you to secure a loan from them. Also, I'd consider a 4 or 5 year ARM when you decide to buy.

 

[onetoothleft]

http://forums.studentdoctor.net/showthread.php?t=139664&highlight=house

we had a discusssion about this a while back too . . . .

Temple/UPenn and UNLV allow house purchases to count for immediate residency.

 

[DDS2BE]

I think it's a great idea to buy a house right before dental school and then sell it after graduation. This way, you will get your monthly payment back and also the profit (if estate goes up in value). Also, you may rent your extra room to a roommate and make some money there. I truly think it's a win-win situation, unless the property looses its value by 50%, which is unlikely.

Remember, renting is not an investment, it's an expense!

My plan is to take a lone while I still have my job, then take loans to cover my school expenses. Hopefully, I can buy something very close to my school.

 

[jdcinza13]

In fact, the rates are just as good as if you paid 20% down. Just don't go to a bank!

Javadi's correct, but there is a nuance there. The interest rate is going to be the same/similar, but if you can muster a 20% down payment then you don't have to pay the Primary Mortgage Insurance (PMI). The PMI on a mortgage alone can cost a pretty penny...almost $150-$200/month depending on where you are. That money doesn't go anywhere except to the lending institution and you still need regular homeowner's insurance on top of that.

If you don't put money down, look for creative financing like an 80/20 loan so that you can save that PMI money....That will add up to lots of money over 4 years.

 

[JavadiCavity]

Good point.

 

[BONAFIED]

I am definitely an advocate for buying vs renting. Just be cautious. I would presume that most of the folks here would be buying what is considered a "starter home". Starter homes, more than any other type of home, are priced by what the payment would be -not the actual value of the home.

For example, in my neck of the woods, most first time home buyers have payments from $475 to $1000 a month. That's usually the range they can afford. A lot of homes that were valued at $85k-$120k 5 yrs ago (with those payments) are now $125k-$160k with no change in payments. Have these homes appreciated 30+% or have the interest rates (which are at all time lows) propped up the prices? The bull in RE will have it's day soon. I don't predict a dotcom-esque collapse by any means, but when rates rise those hardest hit will be the starter homes which traditionally don't appreciate much in the short term.

However, in a 4 year period, it is unlikely that you would ever be out more than if you had just rented (assuming you didn't have your pants brought down on the price). Just use some caution and aviod using an agent.

 

[jdcinza13]

Bonafied,
I completely agree that buying is better than renting. Especially over a 4 yr period. Who knows, when you get out of dental school and move, you might be able to find someone to rent it. I did that with my townhome. It works well.
For others in certain markets, the housing boom has definitely driven the cost of apartments and rentals down. Still I'd recommend buying....

 

[BONAFIED]

Here's a picture of the joint I just bought from a 90 yo lady. Furniture and decorations (including matador painting) were included! 😍 I'll try to post some pics after the renovation. I making it into a duplex, as it is only 1 block from the university. The dirt alone is worth what I paid for this house. Underneath the red carpet is HW. I already have a list of people who want to rent the other unit. I will probably move in next month. If/when I go to D-school, I hope to pocket $6 bills/month in profit. That along with some similar ventures should keep me fed, clothed, transported, and housed during d-school. Now if I could only find a $40k/yr perp to cover tuition...

 

[jdcinza13]

sounds like a sweet setup. just marry a rich old lady and your set.

 

[x-linked]

i bought my condo during second year. i rented out one room and made about 500/month, but i also have to pay maintenance fee (400/month) and tax (250/month)
and when i sell it maybe next year, i also have to pay another 5% out of the price i sell to my agent. so you really need to do calculations before buying this.

but it is still good to buy a condo if you stay there for 4-5 years.

 

[LNinlove]

To avoid paying mortgage insurance go with an 80/20 loan. My wife and I just bought our first townhome for $117,900. We put $1,000 down (for the earnest money) and received something like $880 back at closing. So we purchased a home and only had to put $120 down. We got an 80/20 loan, which means the total loan amount is split into an 80% loan and a separate loan for the remaining 20%. If you do the 80/20 loan...the second interest rate may be a little higher than the first. The first loan is a 5 year ARM and the second loan is a HELOC (Home Equity Line of Credit). We are really pleased with the monthly payment. If anyone has any questions, PM me and I will be glad to help you out!

LNinlove

 

[ItsGavinC]

About 30% of my classmates have purchased homes, and they've all gone up ~30% thus far (1 year) in value.

A very sweet deal indeed.

 

[JavadiCavity]

To avoid paying mortgage insurance go with an 80/20 loan. My wife and I just bought our first townhome for $117,900. We put $1,000 down (for the earnest money) and received something like $880 back at closing. So we purchased a home and only had to put $120 down. We got an 80/20 loan, which means the total loan amount is split into an 80% loan and a separate loan for the remaining 20%. If you do the 80/20 loan...the second interest rate may be a little higher than the first. The first loan is a 5 year ARM and the second loan is a HELOC (Home Equity Line of Credit). We are really pleased with the monthly payment. If anyone has any questions, PM me and I will be glad to help you out!

LNinlove

Great post!

 

[LNinlove]

Thanks Java!

 

[toothcaries]

👍