Home mortgage in med school

[earsopen]

---

Members don't see this ad.

Not sure why this just occurred to me, but how am I supposed to get approved for a home loan in med school with no income? I'm planning on selling my house and taking out loans. My wife is gonna work part-time, but not right away. It would be cheaper to buy than renting for 4 years, has anyone been through this before who can shed some light?

 

[Traumweber]

Rent...rent..rent...Don't buy a house... rent one. Unless you have a family situation that requires owning a home to accommodate special needs, it makes absolutely no sense. If this was 2010, maybe buying a home would help you break even. But unless you are going to put 100% cash down, you will lose money at the end of 4 years. Who knows where you will be for residency!

 

[GreenDuck12]

Even if you have a family situation that necessitates a house, rent one. Don't buy. If you bought a house, even if your home value appreciated in value over four years, the closing costs/costs to sell when you should need to move would negate any increase in value. Additionally, if there is a issue plumbing/ the heater / fire, you most likely will not have the funds to fix it, forcing you to either take out a persona loan which will carry a high interest rate due to the fact you are not working or put it on a credit card which will have a high interest rate. Wait until you actually have an income and are settled in an area to buy a house.

 

[earsopen]

Thanks for the replies guys. In Texas where I'm looking, rent is about $200/month more than the mortgage payment would be. Closing costs should be about $5k (buy + sell 4 years later) plus 6% when we sell for the realtor fee. I would break even if the house appreciated 6% over four years. Is that an unreasonable expectation? Hadn't thought about expensive maintenance, so that's a good point. Thanks for the help guys I really do appreciate it!

 

[BluMist]

It is possible to get into a situation where the monthly rent would cover more than your mortgage. While relatively rare, it is more likely in Texas.

A few more things to consider:

1. do you have enough savings for down payment? if you are not putting that money into medical school, you are essentially borrowing that amount at your student loan rate. Take that interest rate into consideration.
2. when you say rent = mortgage + $200, does that include property tax, insurance, HOA?
3. what if housing market crashes right around having to move for residency? are you willing/financially able to sell the house at a loss? if not, do you have families/friends near by to take care of the property while you're gone or do you need to pay a property management company?

I'd buy if following conditions are met (similar decision when I decided to buy a rental property):

1. do I have enough cash on hand to pay the down payment? This meant I actually had about 2-3x in liquid saving at the time, I still had 3-6 months emergency fund afterwards.
2. mortgage + insurance + HOA <= 80% of monthly rent, the rest of 20% are split around 10% to property management and 5-10% to set aside for maintenance, maybe leaving 5% "profit".
3. on the subject of maintenance, only look at houses <=5 years old, I don't want to replace the roof before I had time to set aside some $

These are definitely variable from person to person, and it is fairly conservative. Though imho, you can't really afford to gamble while you are in medical school.

Thanks for the replies guys. In Texas where I'm looking, rent is about $200/month more than the mortgage payment would be. Closing costs should be about $5k (buy + sell 4 years later) plus 6% when we sell for the realtor fee. I would break even if the house appreciated 6% over four years. Is that an unreasonable expectation? Hadn't thought about expensive maintenance, so that's a good point. Thanks for the help guys I really do appreciate it!

 

[QofQuimica]

Oh, my overly optimistic friend, we are just getting started on the unreasonableness of your expectations. How about property taxes? How about homeowner's insurance? How about paying someone to mow your lawn because you're too busy to do it yourself? How about buying furniture to fill up that house? How about buying an umbrella policy in case your friend slips, falls, and racks up emergency room bills while on your property? Depending on where you are in TX, how about hurricane and flood insurance? Along with expensive major repairs like replacing a roof, how about other routine maintenance to keep your home up? And how about if your house goes down in value right when you're about to sell it, as happened to those of us who went to med school in the mid to late 2000s? (Extra glad I didn't buy a house during med school for that exact reason.)

People *greatly* underestimate the cost of home ownership. Unless you're planning on renting it out, a house is a liability, not an investment. (If you want to invest, then open an IRA at Vanguard.) Not only that, but at this point in your life, you need more flexibility, not less, when it comes to where you live. Wait until you reach my stage to buy a house. Believe me, everyone and their brother will come running to offer you a home loan once you sign that first attending physician job contract.