Buying first house

[The White Coat Investor]

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for a room? that wouldn't rent a room where I'm at and I'm in the middle of nowhere southeast

I paid $188 a month to share a room in college. That was a lot more than 5 years ago though. Closer to 20.

 

[The White Coat Investor]

side question to everyone with experience in this......buying land to build a house. Any of the physician loans/VA loans work toward that or is it pretty much standard land/construction loans?

I don't think so, but never really asked. I've got a list of advertisers on my site that you could ask though.

 

[link2swim06]

for a room? that wouldn't rent a room where I'm at and I'm in the middle of nowhere southeast

It was in Columbus, Ohio. I had my own room (it was a four bedroom townhouse for $1000/mo), with a parking, washer/dryer, dishwasher, A/C, etc. Not a bad place.

I don't live there anymore and pay a little more in rent for a 1 bedroom than that entire townhouse. More reasons to move off the east coast when I'm done with residency.

 

[fahimaz7]

Do you live in time square or on the moon or something?

That's crazy. I paid $250/month for rent in college...that was ~5 years ago. Not a bad place.

In the mountains in a ski town. You're lucky to get a 3 bedroom townhome for 3k/month in rent. To buy that place would be 550k

 

[UnderwaterDoc]

Student loans first, mortgage second. Live cheaply and you can kill student loans in 1-2 years. I did.

 

[ER BlueBlood]

Retired banker here...daughter soon to enter Ortho residency, and her S.O. is already a Neurosurgery resident...hence my interest in this particular topic. Also teach Personal Financial Planning and Investment Management at the college level.

The conventional wisdom is that when you have an income well into the 6 figures you "need" a generous mortgage. A key reason is that the guvment (federal and state, and perhaps more local) effectively subsidizes your mortgage due to the mortgage interest deduction. The Left REALLY badly wants to do away with this primary tax deduction of the upper middle class, but it will be hard to accomplish politically. The Obamanators (European socialists) REALLY want to kill the mortgage interest deduction.

In contrast, student debt is NOT tax deductible. Ergo, it makes sense to pay it off sooner rather than later and retain mortgage debt instead.

The housing crash starting in 2008 (really caused by the Left insisting on CRA-ilk $ BILLIONS of mortgages being granted to those not creditworthy) changed the conventional wisdom a bit. We had gone 70 years from 1938 until 2008 with home values generally rising, but the Left managed to ruin the primary way that most households accumulate retirement net worth.

The stock market was ALSO torpedoed by this PC lunacy as the investment banks were hammered due to MBS's (mortgage backed securities).

An aside...the guvment MADE $ (about $16 BILLION per the guvment itself) on the so-called "bank bailouts"-- it ALWAYS does make $ on bank bailouts...the banks pay the loans back as the economy recovers, whereas bailing out the labor unions (UAW) was a dead loss because it defied economic logic.

Many time what the masses imagine to be true (especially when trumped up by the PC Left) is simply fallacious.

Lol

 

[TrumpetDoc]

For those who have used the doctor loans (lower down, no PMI).
How does your payment compare with mortgage calculator payments online for conventional folks?
I have not tried a doc loan so I do not know, but it seems that they would have a case to charge a higher rate, etc.
just curious.

 

[goodoldalky]

For those who have used the doctor loans (lower down, no PMI).
How does your payment compare with mortgage calculator payments online for conventional folks?
I have not tried a doc loan so I do not know, but it seems that they would have a case to charge a higher rate, etc.
just curious.

Your principal will be 20% higher with your payments about the same. To keep the math simple, if you want to buy a 500K house, a conventional mortgage requires 100K down. Your monthly payments will be on a 400K principal. If you take a doctor loan it is monthly payments on a 500K principal since you did not put money down (there are limits on jumbo loans for doctor loans mind you). A doctor loan is obviously more expensive. You would have to go through a mortgage company to assess if the interest payments are different, I would assume they are slightly higher with a doctor loan as well.

The best bet is a conventional mortgage financially. As an attending you should be able to go that route. WCI may weigh in.

 

[shoal007]

I did a doctors loan, the rate was 4.25 30 yr vs 3.9 30 yr conventional. Pmi was 250 a month and would need to hit 20percent value in 3 yrs or less to make it the same over 12 yrs. Plus reassessment costs, it really wasn't worth it.

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[future_dr_house]

I was offered 3.125 conventional vs 4.125 Doctor loan. PMI for me is 150 per month so I went with a conventional loan and adjusted my payments so I will be done with PMI in a year and a half. It really all comes down to what the math is. Be sure to shop around to get the best mortgage offer.


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[The White Coat Investor]

For those who have used the doctor loans (lower down, no PMI).
How does your payment compare with mortgage calculator payments online for conventional folks?
I have not tried a doc loan so I do not know, but it seems that they would have a case to charge a higher rate, etc.
just curious.

Your principal will be 20% higher with your payments about the same. To keep the math simple, if you want to buy a 500K house, a conventional mortgage requires 100K down. Your monthly payments will be on a 400K principal. If you take a doctor loan it is monthly payments on a 500K principal since you did not put money down (there are limits on jumbo loans for doctor loans mind you). A doctor loan is obviously more expensive. You would have to go through a mortgage company to assess if the interest payments are different, I would assume they are slightly higher with a doctor loan as well.

The best bet is a conventional mortgage financially. As an attending you should be able to go that route. WCI may weigh in.

The payments are higher. Duh. They have to be higher. The loan is bigger and the interest rate is higher. Here's a quick example. Let's assume a $500K 30 year doctor loan mortgage at 4% and a $400K 30 year conventional mortgage at 3.5%. The annual payment on the doctor loan is (plug this into excel):

=PMT(4%,30,-500000,0,0) = $28,915.05 Divide by 12 for a monthly P&I payment of $2,410

The conventional:

=pmt(3.5%,30,-400000,0,0) = $21,748.53 Divide by 12 to get a monthly P&I payment of $1,812

If you want lower payments, get a smaller loan at a lower interest rate with fewer add-ons like PMI. The way you do that generally is by putting more money down. Doesn't mean that's the best thing to do for you, but that's the way to get the lowest payment. The lowest payment of all is just paying cash for the house.