Residency and purchasing a home

[medgrlsox21]

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Hey everyone,
So during my residency search I've been looking at housing markets, because at the age of 25 I'm tired of living in apartments my entire life, and I also have two large dogs who desperately need a large yard to run around it when I'm too busy, or I'll admit lazy to take them on hour long walks. I was wondering how much residents can afford. I know little in this area. Some background: all I have are student loans from medical school. No car payment, no kids etc. So basically between paying off loans what's my maximum house price? I only ask because I love certain programs like Maine for example, but they seem to be pretty pricey for small, old houses. 😕

 

[sia_simba]

Don't be like the rest of America and purchase something you cannot afford. That is why the economy is doing so bad with all the bad loans that were made.

Even if you purchase a $200,000 home in Maine, plus your ?$150,000 Loans, that is $350,000. When purchasing a home, you NOT only need the down payment, but what if something breaks? or you have a leak? or you have to fix something else in your house? Will you have the $$$ to pay for it? or would the bank have to take back the home?

Unless you know where you want to be at 100%, I wouldn't make such commitments. I have seen residents purchase expensive homes, not even, but rent expensive apartments and then having to leave for something cheaper.

Making $60,000 a year is not a lot since after tax, you will only be getting about $35,000 to $40,000 net. Each Month making from $2900 to $3300. You do want a saving account right?

Plus the interest rate is anywhere from 4-5%. Unless you have a large down payment, the initial 10 years of your repayment is mostly on Interest. You will pay back your principal in the last 15-20 years.

Bottom line, if you are 100% certain you will stay in the area with a guaranteed job (Jobs are hard to come by even for physician) and raise a family there and 100% sure your partner's job will be there as well, then by all means, purchase a home instead of rent. If you have any of the doubts mentioned, then I would say go with Rent.

FYI, I am an Attending making very good $$$, but still paying rent. Reason? The ones I mentioned to you above.

 

[medgrlsox21]

Wow I had no idea how bad it was out there. I wouldn't mind the renting if it weren't for the dogs. They're large breeds, and they're young and active. I guess I'll have to look into renting houses with yards.
Thanks!

 

[deleted87716]

Given the downturn in the housing market, you should think long and hard before purchasing a home if there's any chance at all that you'll need to sell it in three years or so after you finish residency. The market hasn't bottomed out yet. You could be stuck with that house for a long time.

Don't buy until you're where you're going to be for the forseeable future. Housing nowadays is a long-term investment.

 

[TypeADoctor]

On the above note I have read that you need to stay in a home for atleast 5 years to make up the costs of the home buying and then selling process.

 

[deleted87716]

On the above note I have read that you need to stay in a home for atleast 5 years to make up the costs of the home buying and then selling process.

At least. Given the ongoing decline in real estate values in most markets, it's probably longer than that now.

 

[MJB]

We have decided to buy, because renting SUCKS.

I'd rather lose 10 grand or so in a few years than pay money into the bottomless pit that is rent.

Of course, if I was single....and going to be a resident, I wouldn't have two large dogs...and would rent a townhome or something.

 

[GoodmanBrown]

We have decided to buy, because renting SUCKS.

I'd rather lose 10 grand or so in a few years than pay money into the bottomless pit that is rent.

Of course, if I was single....and going to be a resident, I wouldn't have two large dogs...and would rent a townhome or something.

There are lots of good reasons to buy vs. rent, but if you're mainly doing it for the money, then the attendings are giving good advice. If you buy a house, and then sell it in 3 years, you are basically guaranteed to lose money in this market compared to renting.

Closing costs are several thousand, realtor costs are several thousand, and you're mostly paying interest at first. Plus you've got to pay property taxes and any upkeep on the house. If you're looking to maybe sell the house in 3 years, the bottomless pit is actually the house.

Check out this site for a very thorough cost comparison of buying vs. renting.

 

[Sportdoc]

A classmate of mine bought his house at the start of residency and in total took about a 10K hit on it when he finally sold it. He also had the headache of balancing two mortgages for 3 months.

I did buy a house at the start of residency and still live there so it worked out for me. However I live in the midwest so housing prices our cheaper. I also didn't have kids and did quite a bit of moonlighting which made things easier.

 

[cabinbuilder]

I bought a house in South Texas at the start of residency on the doctor's loan. It was zero down and my loan amt was only 100K. I also did a homeowner's insurance policy that covered major appliances, the plumbing, the air conditioner, and more for $45/mo so when my AC went out to the tune of $3000 I only paid the $50 dollar service fee. Same with my plumbing, garage door, and garbage disposal. Look into that type of coverage.

When I graduated residency there was no way I was able to even expect to sell that house so what I did was have my brother-in-law live in it, pay a portion of the mortgage and use the loss on taxes.

The market is very soft now, difficult to get a house with zero down and you definitely won't be selling it anytime soon.

 

[ghost dog]

Hey everyone,
So during my residency search I've been looking at housing markets, because at the age of 25 I'm tired of living in apartments my entire life, and I also have two large dogs who desperately need a large yard to run around it when I'm too busy, or I'll admit lazy to take them on hour long walks. I was wondering how much residents can afford. I know little in this area. Some background: all I have are student loans from medical school. No car payment, no kids etc. So basically between paying off loans what's my maximum house price? I only ask because I love certain programs like Maine for example, but they seem to be pretty pricey for small, old houses. 😕

While houses have a big upside, they also have some significant drawbacks.

One in particular is unexpected expenses. My wife and I purchased a relatively new house 4 years ago, and have incurred a number of these expenses. I should note that we did have the house inspected prior to buying.

Here are the expenses:

1. Reshingling of roof : $ 8000
2. Replacement of patio / New patio ( old patio was rotten ) : $ 26,000
3. Maitenance of Front entrance : $ 9000
4. A/C blew, with replacement: $ 2000

Luckily I was able to afford these expenses. However, if I was a resident I would have had to take out yet more loans. Putting aside the issue of housing values, I think you are better off renting during residency. It's just not worth the headache, time and energy during these years. Wait until you are an attending, and then take the plunge.

 

[DaveinDallas]

And no one has yet mentioned all the maintenance that goes into the house....I'm not talking big stuff but the little "drain on your copious spare time" stuff...

Like mowing the yard, raking the leaves, trimming the hedges, touch up painting, sealing/caulking windows, watering the yard/plants, maintaining the fence...all that stuff that your apartment hires a full time maintenance person to do and you never see....when you own the home...it's all you....and on $50K, you cannot afford to hire someone to do it for you.

Also, don't forget the cost of all the tools, lawnmowers, edgers/weedeaters, inevitable tool set you'll need for doing little things like hanging pictures, mirrors, etc.

Oh, yeah, don't forget the cost of blinds...and if you don't want to stare at white walls and the inside part of blinds for the next X years, curtains/valances, plus the cost of all the additional furniture you'll need that you don't have in your apartment....

And more than likely, you'll want new furniture since the sparkly new home doesn't look good with the formerly beer soaked couch where that numbnuts shook the Cudweiser before opening it to spray the female he was trying to impress....or the chair with the onion dip that got dumped on it when the dog jumped up and nailed the plate that you so graciously set down to run to the bathroom during the big game or the ....you get the idea.....

Anyway - I'm putting off buying another house until I'm about a year out of residency....I purchased mine long ago when I was in another career...it's small -- very small but adequate for my family.....I plan on renovating it and updating the 20 year old appliances, putting in new floors, windows, roof, yard, sprinkler system before I turn it into a lease property....which is how my grandfather wound up with almost more money than God....he purchased every home his kids ever sold and wound up with like 20 investment properties in good neighborhoods that were eventually paid off by the time he was ready to retire....voila' ...not so instant millionaire....

but I've digressed...think long and hard about this one and stay away from salesmen with their ' well look at how much money you could save'....Actually had a guy tell me that given the projected energy efficiency, tax breaks, etc., a $400K home would actually be cheaper than my current $150K, almost paid off house and I should buy, like right now.....

I wanted to ask him,"Do I look stupid to you?"....

 

[TSasser]

And no one has yet mentioned all the maintenance that goes into the house....I'm not talking big stuff but the little "drain on your copious spare time" stuff...

Like mowing the yard, raking the leaves, trimming the hedges, touch up painting, sealing/caulking windows, watering the yard/plants, maintaining the fence...all that stuff that your apartment hires a full time maintenance person to do and you never see....when you own the home...it's all you....and on $50K, you cannot afford to hire someone to do it for you.

👎

I don't know about the rest of you, but I was able to afford to hire a pest control company and a yard crew to mow my lawn and trim every other week only making a combined income of around $45k a year. You are talking about making $50k By Your Self.

It's all about how you manage your finances. There are many people out there that have a combined income of around $40k - $60k a year that can Hire someone to do it for them. If I and all of them could do it then so can everyone else in that similar financial situation.

 

[DaveinDallas]

👎

I don't know about the rest of you, but I was able to afford to hire a pest control company and a yard crew to mow my lawn and trim every other week only making a combined income of around $45k a year. You are talking about making $50k By Your Self.

It's all about how you manage your finances. There are many people out there that have a combined income of around $40k - $60k a year that can Hire someone to do it for them. If I and all of them could do it then so can everyone else in that similar financial situation.

Point taken---I've got two active teenagers to support and we do a lot of 'fun' stuff - pro-soccer games, hockey, eat out that probably burns through our cash more than it should.....but I find that I just want to get out on those precious few days off so I make the trade....most of the house maintenance is done on weeknights/early saturday so we can have the rest of the weekend.....

 

[TSasser]

Point taken---I've got two active teenagers to support and we do a lot of 'fun' stuff - pro-soccer games, hockey, eat out that probably burns through our cash more than it should.....but I find that I just want to get out on those precious few days off so I make the trade....most of the house maintenance is done on weeknights/early saturday so we can have the rest of the weekend.....

I have 2 teenagers myself and it definitely is not easy but doable, with an income.

However, to the OP. With the housing market the way it is, and not looking like it's going to change anytime too soon, I would only buy if you are sure you are going to be in that area longer than 5 years.

Renting may may not be ideal for some, but there are some nice houses for rent out there. Plus you wont be stuck there if you decide to move after residency and the house can't sell.

I have about 6 houses in my neighborhood that have been for sale now going on 2 years. It's a tough market out there.