Home loans for med students

[B_ADAMS]

I'm sure this topic may have been discussed in the past, but here is my situation.

I am an MS2 and am married. My wife is a teacher, so we have an income.

We are sick of throwing money away on rent, so naturally we are looking to buy a house.

I've done the home work and know what we could afford to pay on a house, but the question is, how do we go about securing a home loan considering my indebtedness as a medical student?

Would our best bet be to simply put the house in my wife' s name or not?

Or are there programs out there for future docs that take into consideration one's future salary and the ability to pay off a loan in the future?

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[mpp]

The mortgage companies are practically throwing money at people these days. I qualified for $130,000 mortgage and the only thing that they did was to look at my credit report and I had to tell them I have income...no questions on the source or amount of that income as long as I said "Yes, I have a source of income." It doesn't hurt to apply for a mortgage...the worst they can do is turn you down. All mortgage credit checks within a certain time period (I think it is two weeks) are reported as a single credit check (i.e., you can check with many mortgage companies without having a whole bunch of credit checks show up on your credit report).

 

[phd2b]

Ben,
Are you going to spend all 4 years in Pikevegas? If so, buy. You'll qualify based on your wife's income, all else being the same. If you might move after OMS-II, I'd not buy. PM me for other trite advice.

 

[Macken]

Hey, B_ADAMS

I'm a mortgage banker now (at least until May...thank God). Don't worry about your student loans...the standard guideline is: as long as the student loan is deferred for at least 12 months (s/b no problem to meet this), the debt isn't counted.

No programs will project any future income for you, but hopefully you'll be able to qualify on your wife's income.

Good luck! PM me or post here if you have any more questions.

 

[Krony]

Hey Macken and others...

Last year my wife and I made ~40K and at present I'm sure we could qualify for a decent mortgage. I'm starting med school and she's starting dental school so all of our living expenses will be covered by loans. Will lenders be reluctant to give us a loan given the circumstances? If not, given the circumstances is there good reason that we should avoid taking a mortgage that we'll be paying with other loans? My thinking is that it will be better than throwing money away on rent.

Your thoughts will be appreciated.

-Krony

 

[Macken]

Hey Krony...

You've got a couple of options:
A) If you're going to go to school in the same area as your wife's employment, buy the house now and keep quiet about your wife's future plans;
B) Use a No Doc program (no income verification, no assets) if you can qualify. It's a no-questions-asked deal that relies on strong/excellent credit & good property.

Lenders won't loan to you when your only source of income is student loans, unfortunately. Any income earned in the past that won't continue can't be considered for repayment.

I own a house now but am planning on renting when I move to start med school in the fall. I looked at the possibility of buying but figured since I won't be able to itemize & write off the interest, it probably wasn't worth it. It all depends on where you're going to school and what the resale market is like there. If there's been little to no appreciation in the market, it might not be worth it to buy because you might not be able to recoup your costs when you need to sell in 3-4 yrs. If it's in a strong market, though, it might be beneficial to build up that equity...

Hope this helps.

 

[Krony]

Macken thanks for the advice...

I like choice "A" although unfortunately my wife and I are in CA and we're headed to WI. This question will betray my newness to all of these issues: if purchasing a home you would not benefit by interest deductions because...you won't be making a significant enough amount of money in school to realize any meaningful tax savings?

I'm headed to suburban Milwaukee (MCW) and I have very little information about any respectable appreciation potential on the older homes that I'd be looking at. I wonder if this plus my anticipated need to be able to pick up and leave quickly for residency might be pointing toward the wisdom of renting.

Thanks again for your help.

-Krony

 

[Macken]

Hey Krony ---

Good question and one I just had to check on myself. I had asked my accountant the same question when filing returns last month. There is no tax savings for interest deduction if you're not making any money. If you earn 0 income but have $12,000 in itemized deductions, it won't benefit you (ie, Uncle Sam isn't going to look at a $-12,000 loss and cut you a check back). I know that's part of the reason I'll probably rent vs. buy.

So the only benefit to owning a home is indeed the equity appreciation. You'll have to look at Milwaukee stats (I'd suggest contacting any realtors in the area) to see what appreciation rates are like and all that good stuff.

Good luck!

 

[mikecwru]

Originally posted by Macken
Hey, B_ADAMS

I'm a mortgage banker now (at least until May...thank God). Don't worry about your student loans...the standard guideline is: as long as the student loan is deferred for at least 12 months (s/b no problem to meet this), the debt isn't counted.

No programs will project any future income for you, but hopefully you'll be able to qualify on your wife's income.

Good luck! PM me or post here if you have any more questions.

But you can get future income projected as a 4th year med student going into a residency. There are physician home loan programs.

mike