Aug 2, 2017
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would a surgeon be able to pay off a 2 million dollar debt fast? Now if a surgeon that completed residency and is debt free, and has a stable salary of 500k+ And wanted to build a house that has a floor plan of around 2mil. Now, the surgeon got the loan, and builds the house, would the surgeon be able to pay off his debt quick? Let say within under 10 years. Would that possible? Also let say the surgeon doesn't use all the loan and gives the rest back would that also help pay back the 2mil loan quicker?
 

cpants

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Sure it's possible within 10 years. This is relatively simple math. At 5% interest a $2M loan will require monthly payments of $21,213 ($254,556/year) to pay off in 10 years. Calculate what your take home pay will be after federal and state taxes -- my guess about 300K. So if you can cover all your other expenses aside from the loan on 50k/year -- you are golden.
 

Another Second Opinion

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You'll also get some tax benefits for the interest paid toward the home loan so you'll have a little more to work with each year. But still, $250,000 for a home and $50,000 for all other yearly expenses seems awfully lopsided to me.
 
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ThoracicGuy

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would a surgeon be able to pay off a 2 million dollar debt fast? Now if a surgeon that completed residency and is debt free, and has a stable salary of 500k+ And wanted to build a house that has a floor plan of around 2mil. Now, the surgeon got the loan, and builds the house, would the surgeon be able to pay off his debt quick? Let say within under 10 years. Would that possible? Also let say the surgeon doesn't use all the loan and gives the rest back would that also help pay back the 2mil loan quicker?
You might be able to, but you'd be foolish to do so.
 
OP
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Aug 2, 2017
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So would the best route be to pay the loan back little by little on a steady monthly plan like 20 or 30 years payment plan
 

Chip N Sawbones

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So would the best route be to pay the loan back little by little on a steady monthly plan like 20 or 30 years payment plan
What if something happens ten years down the road such as a family member getting sick and needing your constant attention, or an injury that ends your career as a surgeon? You won't be able to make your giant mortgage payments and you'll have to sell the house. If the real estate market happens to be in another downturn you could easily lose the million dollars in equity you've built up in it. Buy a house that you can reasonably afford now. Pay it off quickly and save your money until you can put down a nice big down payment on your dream house.
 

BorntobeDO?

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would a surgeon be able to pay off a 2 million dollar debt fast? Now if a surgeon that completed residency and is debt free, and has a stable salary of 500k+ And wanted to build a house that has a floor plan of around 2mil. Now, the surgeon got the loan, and builds the house, would the surgeon be able to pay off his debt quick? Let say within under 10 years. Would that possible? Also let say the surgeon doesn't use all the loan and gives the rest back would that also help pay back the 2mil loan quicker?
Why would you do this?
So would the best route be to pay the loan back little by little on a steady monthly plan like 20 or 30 years payment plan
I think you need to ask yourself why you can't do this cash. If the answer is 'I could never save up that much money' than you don't need to finance it either. Your overleveraging yourself. And the thing is, with your income, you have no need to do this. You could buy a nice house in most places for 1/4th of the cost of what you are talking about. Even in California/NY, 1 million would be a decent house. Why would you go into such serious debt, and pay all that interest? For the tax write off!

'Yeah Steve, I paid 50k in interest last year, but I got 10k off my taxes due to the writeoffs, pretty sweet right?' No its frickin dumb.
 
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BorntobeDO?

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Sure it's possible within 10 years. This is relatively simple math. At 5% interest a $2M loan will require monthly payments of $21,213 ($254,556/year) to pay off in 10 years. Calculate what your take home pay will be after federal and state taxes -- my guess about 300K. So if you can cover all your other expenses aside from the loan on 50k/year -- you are golden.
Someone who is paying 20k a month on their house, is gonna live on 4k a month? If that's not the definition of house poor, I don't know what is.
 

FutureInternist

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You'll also get some tax benefits for the interest paid toward the home loan so you'll have a little more to work with each year. But still, $250,000 for a home and $50,000 for all other yearly expenses seems awfully lopsided to me.
I think there is a income limit beyond which this does not apply.
 

Another Second Opinion

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I think there is a income limit beyond which this does not apply.
I think you're referring to the Alternate Minimum Tax in which you can't deduct the property taxes, but can still deduct mortgage interest up to $100,000/year I believe.
 

hamstergang

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So would the best route be to pay the loan back little by little on a steady monthly plan like 20 or 30 years payment plan
The best route would be for you to get into med school first before planning to spend more money than you could afford before you can't afford it.

If you're really interested, there are plenty of "how much house can I afford" calculators out there that would answer this question for you.
 
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