Buying a House

[TarpolianDynamite]

I know it is generally frowned upon to buy a house while in medical school, but if one were to humor the idea where would I need to start?

I know all of the pros and cons of owning our own place but I am really just having trouble finding out if it is even feasible to become qualified for a mortgage while in medical school. The problem I keep coming across is the need for proof of income which the loan money I would be using would not be considered.

My wife has a stable career with decent income and a small DTI ratio. We both have good credit and our cars will be paid off next year so the only thing we will be paying for is the place to live and the costs associated with living in said place. The only thing I can come up with would be for her to take out the mortgage in her name alone and then I would just pay for it with the loan money, but I am not sure if she can do that sense we are married.

Is there anything that I am not considering that would help us get qualified for a mortgage?

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[deleted480308]

What is the rent vs mortgage price in the area. Are there a ton of residency options within driving distance?

 

[TarpolianDynamite]

What is the rent vs mortgage price in the area. Are there a ton of residency options within driving distance?

Cost of renting a single bedroom apartment is more than the calculated cost of mortgage and HOA fees of a 3 bedroom 2 bath house (buyers market with a 75yr build out plan under way).

2 residency hospitals and multiple community residencies are within 45 mins of the area we are looking at with an expansion of one of the hospitals opening December in the same zip code we are considering this year in response to the new build out. I have strong personal ties to one of the residency hospitals and I feel fairly confident I can get this position.

My rotations for 3rd year would take place in proximity with 1 of these 2 hospitals.

 

[deleted480308]

Do you have significant down payment?
Will you be able to afford the deductible for a major repair if needed later?
Can you swing the potential cash loss of ~5% if the house doesn’t raise in value and you have to sell?
Are you card going to last through school for sure? because getting a car loan after the mortgage will be harder

Your wife’s tenure at her job or in her career will help.

If all those answerd work out it might be a reasonable plan, good luck with it sir/ma’am

 

[TarpolianDynamite]

Do you have significant down payment?
Will you be able to afford the deductible for a major repair if needed later?
Can you swing the potential cash loss of ~5% if the house doesn’t raise in value and you have to sell?
Are you card going to last through school for sure? because getting a car loan after the mortgage will be harder

Your wife’s tenure at her job or in her career will help.

If all those answerd work out it might be a reasonable plan, good luck with it sir/ma’am

I appreciate your replies. Yes to all of the above.

We went recently to our bank to test the waters and to see if we would be approved if we did apply but I got the call this morning that because my loans do not count as reliable income, we would not be approved. Is there any way around this that I am not thinking of?

 

[deleted480308]

I appreciate your replies. Yes to all of the above.

We went recently to our bank to test the waters and to see if we would be approved if we did apply but I got the call this morning that because my loans do not count as reliable income, we would not be approved. Is there any way around this that I am not thinking of?

Try a credit union as they can sometimes be more creative

It might also be worth calling some of the mortgage folks on dave ramsey’s site, he’s always pitching that his recommended folks are better at manual reviews because he tells his listeners to not use credit so their scores are often bad. Ironic that the guy preaching “no debt” might be an avenue for you get a mortgage but you know, whatever works

 

[Dr. Anonymouss]

I can’t imagine how this would ever be a good idea. If you are at a DO school you will be moving for clinicals, and residency could take you anywhere in the country. Why would you ever want to be tied to this anchor when it is time to move. Needless to say, incurring more debt when you are already looking at 200-300k in debt is a terrible idea. I hate to be the Debbie downer, but I don’t understand how you could possibly think is a good idea. Rent a house until you are an attending and have solidified a job and a stable income.

 

[TarpolianDynamite]

I can’t imagine how this would ever be a good idea. If you are at a DO school you will be moving for clinicals, and residency could take you anywhere in the country. Why would you ever want to be tied to this anchor when it is time to move. Needless to say, incurring more debt when you are already looking at 200-300k in debt is a terrible idea. I hate to be the Debbie downer, but I don’t understand how you could possibly think is a good idea. Rent a house until you are an attending and have solidified a job and a stable income.

The way I was looking at it was:
I am spending $1500 a month on rent at a crappy apartment for 2 years (3 if you count the SMP I did) with nothing to show for spending that much money. I am going to have debt anyways, why not use it towards something I can own if it's cheaper than renting an apartment?

If I was to get the rotation site that I want, it would be cheaper to pay a mortgage ($1000 3 bed 2 bath house) in the area rather than paying for rent ($1500 2 bed 1 bath). Plus the area is where my wife and I grew up and where we want to live eventually so having a house seemed like a better idea so we have some place to come back to.

Property value in this area has been increasing over the last 10 years. My parent's house is now valued at 5x what they originally built it for. There is a lot of investment by the city into the rebuilding of its infrastructure and preparations for a population increase of 100,000 people in the next 75 years.

Plus when I do have to go away for interviews or rotations and have to leave my wife alone for weeks-months at a time, I know she would feel safer in a house rather than an apartment complex with high traffic.

If I do have to move for residency, I can easily rent out or probably sell the property. Friends from high school are always flipping houses back home now and making really goofy amounts of money doing it.

I know it is frowned upon but if it is cheaper and you own property why wouldn't it be preferred?

 

[Dr. Anonymouss]

There are multiple reasons I am opposed to it. Number one, you are paying for a loan on the house with a loan, that’s just never a good idea. Also, renting the house is an option if you move away (which is extremely likely at this point in your career), but the logistics can be tough. I can guarantee you won’t have the time to vet clients, deal with legal problems, uphold maintenance issues when they arise. If your wife wants to take on this responsibility that’s a different story, but don’t count on yourself being there for this endeavor right now. Renting has it’s obvious pros: you don’t ever have to worry about maintenence issues if something breaks, just call the landlord. Also the most convenient is that you aren’t tied down to a certain location with a monthly payment over your head. If you planned on living in this location from now until the indefinite future it would be a wise investment, but you can’t guarantee you won’t move away (and you most likely will). Think about this long and hard because I don’t think it is a wise decision.

 

[TarpolianDynamite]

There are multiple reasons I am opposed to it. Number one, you are paying for a loan on the house with a loan, that’s just never a good idea. Also, renting the house is an option if you move away (which is extremely likely at this point in your career), but the logistics can be tough. I can guarantee you won’t have the time to vet clients, deal with legal problems, uphold maintenance issues when they arise. If your wife wants to take on this responsibility that’s a different story, but don’t count on yourself being there for this endeavor right now. Renting has it’s obvious pros: you don’t ever have to worry about maintenence issues if something breaks, just call the landlord. Also the most convenient is that you aren’t tied down to a certain location with a monthly payment over your head. If you planned on living in this location from now until the indefinite future it would be a wise investment, but you can’t guarantee you won’t move away (and you most likely will). Think about this long and hard because I don’t think it is a wise decision.

I mean yeah, its a big and difficult decision that is no where close to being final. But, my original question was "if I were to buy a house how would I start?" not necessarily if it was a smart decision for everyone. The big temptation is that I am dead set on living in this location, the family/friends we have in the area, and the fact that I pay rent now and I still end up doing all of the handy work around our apartment (this one is more personal to my complex but still I know more about refrigerator repairs than I do about female hormone regulation during pregnancy).

I appreciate your comments and insight though!

 

[acstylin]

I do not see the difference between paying for a mortgage with a loan vs paying rent with a loan. I would say do it if you can swing it. Apply without using your income but do use your credit score. My wife and I do that. She is a stay at home mom with no income but I believe her high credit score helps us somehow. If you can’t qualify with your wife’s income, you May out of luck though.

 

[BorntobeDO?]

If your rotation sites are mostly away from the school I wouldn’t do this. Especially in a buyers market that is likely to remain a buyers market. This sounds like your gonna get hosed, especially if you can’t afford the house without student loans.
Also the extra pressure your putting on yourself to pass could be an issue depending how med school goes. I would hate to be struggling in school and to have a anchor house holding me down at the same time.

 

[AMEHigh]

For the practical matters- yes your wife can get a loan without you even though you are married. If she qualifies under her income then that’s no problem. You can be on the deed of the house without being on the mortgage.
You should make a budget that includes money for taxes and repairs. Then you can get pre-approved. You’ll often get pre-approved for more than you really can afford. So again stick to your budget.

Since it sounds like you don’t know much about buying a house I would make sure you have enough in savings to cover repairs and any emergencies. Home buying is expensive!

 

[Chibucks15]

It’s risky. With so much moving around, not to mention 4th year where you’re going to have to rent a place during away rotations. That mortgage better be significantly cheaper than average rent to make it work. And if it doesn’t sell you’re kinda screwed

 

[AnatomyGrey12]

I bought a house. Would definitely do it again, although I knew I wouldn't be moving around for 3rd year. We are currently looking at a net 10k if we sold this week with all predictions for our area saying that should increase by next year when we likely move.

 

[Chibucks15]

I bought a house. Would definitely do it again, although I knew I wouldn't be moving around for 3rd year. We are currently looking at a net 10k if we sold this week with all predictions for our area saying that should increase by next year when we likely move.

That’s the key. If you’re in a place you know 100% you won’t have to travel it’s by far worth it. But most DO schools who the hell knows

 

[TarpolianDynamite]

The house would be away from school but at the rotation site that I want as well as where I’m hoping to do residency. I am a first year now but I should find out my rotation site by December. I’m pretty confident I can get this site because I worked with the rotation site director before attending school and I’ve stayed in contact with them.

So really the goal would be to be in a house for 3rd and 4th year. I know I will be traveling for 4th year but having a place back home and near family for my wife would make me feel better than leaving her in an apartment somewhere. Then coming back to our starter home that has hopefully started going up in value by then to live in through residency.

 

[MusicDOc124]

1) Your ties don't matter unless it's family or a long-lasting mentor in many cases
2) your field of interest may, and likely will, change over time, and various programs may offer better/stronger training
3) you might want to go somewhere else for residency once you start interviewing anyway and seeing what's offered elsewhere
4) simply looking at your cost of renting versus monthly cost is not enough

- for instance: homes/condos don't always increase in value right away. It's similar to investing where longterm over 10 years give or take will likely have an increase, but 1-2 years out there could be an overall decrease or plateau.

- the amount you're paying in HOA and interest is likely NEAR the cost of your rent in some cases depending on the cost of the house/condo being looked at

- when renting and something goes wrong, you call a single number at any time, and they come fix it - doesnt matter what it is, and it doesnt matter what time if you allow them to enter without you being home. Owning means you have to call the right people (could be multiple) and be home for the work to be done because they won't have access otherwise.

- There are hidden costs. A friend who bought a house for residency ended up having $20k in repairs in the 1st 2 years due to a storm with damage that wasnt covered by insurance unfortunately, and another friend who had an oil leak in his first year owning his house which was a $7k repair off the bat.

- interest is front-loaded, and then tax, HOA, insurance, and PMI if you have less then 20% to put down - meaning, a small minority of your payment is actual principal.

- dont forget closing costs

- when you go to sell it, expect to pay a tax - on average, I'd say it would be a total of around 5-7% of the home.




^^ all said a done, the amount of money you will pay in taxes, insurance, PMI, HOA, interest, and upkeep/repairs will altogether outweigh the equity to where you likely get nothing back out of it in such a short time, and may end up paying even more (plus the inconveniences) with such a short period of ownership.


If you are thinking of renting it out while you move for rotations or residency, then you have another thing coming - you won't have time to play landlord, and you likely won't want to.


Also, with such a limited income overall + having student loans ... do you really think you could afford a place you see yourself living in as an attending? If not, then it really makes absolutely no sense to buy while still a student.




Revisit the idea as a resident if you really feel the need to buy then.

 

[Espressso]

You seem incredibly confident in securing a specific rotation spot and also a specific residency spot, but you attend a DO school. As a third year DO student who went through the rotation site debacle. I will say, it's you shouldn't be so confident unfortunately.

In the event that you do buy a house on loans. You better be prepared for worst case scenario... like your rotation site being 3+ hours away causing you to have to move your family or yourself and leave your family behind.

 

[deleted480308]

This seems like a less well planned decision the longer you explain it

 

[TarpolianDynamite]

This seems like a less well planned decision the longer you explain it

I was more or less trying to get the steps together so that if my wife and I decided that buying a house would be the better option then we could proceed accordingly. The whole thing is completely dependent on me getting the rotation site that I want and that the plan that we have stays the same of being back home for/moving home after residency. All of these things lining up seem unlikely but I want to organize everything that I can control so that if everything else falls into place I can just pull the trigger and have my steps laid out.

I guess another thing to consider is: If everything did play out perfectly, do I gain anything by owning a house 2 years earlier than I would if I just waited until residency to buy a home?

 

[ciestar]

Wait until residency, honestly. You never know where you’ll end up.

 

[austintr]

N = 1, but we bought our second house for med school, mainly because we could afford it with one income. If you have financials in order and can buy in a suburb with projected growth, it can be wise. Our house has appreciated in just 3 years and since we made a solid down payment and avoided PMI, we stand to profit 40% of the original purchase price if we sell today. Minus taxes, interest and selling costs, we would make ~125% of our down payment. That outperforms the market by a factor of...10? That part gets blurry.

The other side is that we have had to spend probably 4k over the last few years on appliances and repairs and the other little nickels and dimes. Those unexpected costs can suck.

But I am opposed to my core to paying 1500-2k a month for a little apartment with nothing to show for it at the end. Your opinions may vary wildly from mine.

 

[sab3156]

This is a question for a financial adviser, not SDN. You wouldn't go to your dermatologist to fix your car, so you shouldn't come to SDN to ask complex financial questions that can impact your future financial well-being.

Any answers you receive here are going to be medical student opinions on finance, and without a full understanding of your location, your financial situation, actual calculations, or anything else that's highly relevant. Keep that in mind before you proceed to act on anything you read here.

 

[TarpolianDynamite]

This is a question for a financial adviser, not SDN. You wouldn't go to your dermatologist to fix your car, so you shouldn't come to SDN to ask complex financial questions that can impact your future financial well-being.

Any answers you receive here are going to be medical student opinions on finance, and without a full understanding of your location, your financial situation, actual calculations, or anything else that's highly relevant. Keep that in mind before you proceed to act on anything you read here.

I understand that. I was looking for people that have personal experience of buying a home while in medical school. When I went to the bank to look into getting a mortgage and compare the price vs renting an apartment, they told me that I would not be approved because they would not accept my loan as "income". So I was looking for advice on where to start and what has worked for other people that have considered/followed through with this option.

Anyways, where I stand right now is somewhere on the fence still.
If everything works out perfectly: We will be in the same area for 6+ years which makes sense to me to go for a house over the apartment/rent option.
If everything does not work out perfectly: We spend a lot of money and use up our first time home buyers perks on a house that we live in for 2 years max.

Renting seems like the safest option but owning a home has the chance for a high reward.

 

[medschoolfever]

Buying vs. Renting

It really depends on your financial situation and market where you live. In your situation, my suggestion would be to buy a house only if your situation can meet the following criteria (my opinion, not fact):
1. Cost of house <$150K (3 bed, 2 bath)
2. Rent for similar 3/2 house is at least 1% of purchase price (eg. $150K purchase price, rent $1500/mo)
3. Your mortgage payment including taxes and insurance should not exceed 1/3 of your combined take home income (after taxes)
4. You have enough to make the 20% down payment, otherwise you would incur PMI (private mortgage insurance)
5. You have at least 6 months emergency fund in savings account
6. You have a DTI ratio of <50%. This may be required for a mortgage anyway.

If buying a home is a stretch it would be better to just rent. Also remember that paying rent is not "throwing away money". You are paying to have a place to live. A mortgage is the same thing except you are paying interest instead of rent and hoping for property appreciation. If you are unlucky, the market could depreciate and you could end up "under water". Make sure you have a solid exit strategy if you have to sell or rent out in the near future. Buying a home really depends on a lot of factors and you will have to look at your own situation to make this decision.

It would be best to consult a financial advisor or accountant.

 

[medstar11]

I am an n of 1 but my husband and I purchased a house for the duration of medical school. Our cost of living includes homes that are <$80k though so I am not sure if I could be of much help. We used just my husbands information and job income to qualify. He works just a middle of the road job so nothing super extravagant. It worked out for us as we are planning on putting our home on the market for probably a $7k gain after all costs and upgrades we have made. This also doesn't include the equity we have built so we will hopefully have a nice down-payment for where ever we go next.

 

[hallowmann]

So a resident nearby bought a house intern year. His residency is closing and there's a strong chance he won't get into another within a 100 mi radius. He's gonna lose money on it.

I'm in residency, I bought a house at the beginning, and if I sold today at what places average, I'd break even or make a little. By the time we actually sell, we'll probably make an OK amount. That said, depending on where the market is, it might be a wash if I had just invested the downpayment.

The bottomline is that there's a lot of variables involved. Its risky even when you take a lot of things into account, but the longer you stay in a house, the more likely it is you'll do OK. Personally, I would hesitate to do it for med school, mainly because the match is unpredictable, so are rotations to some degree, med school is stressful and you don't want something that big hanging over you.

 

[Epilepsy365]

I plan to buy one at the start of residency.

If the market tanks midway through residency, I plan to double down and buy another one.

It is a good way to start your real estate portfolio in your 30s if you know how to keep cost under control. With the current climate in medicine, you need to think of backup plans. Mine are the followings:

1) Academic/Research/Biotech consulting
2) Stock investment
3) Real estate portfolio

As a medical student, you will be under the thumbs of school admin. As an attending, you will be under the thumb of hospital admin. Don’t be the person that has to work bc you need to. Be the person to give your stipulations and give the middle finger to corporate hacks when they cross the line.

Freedom is invaluable.