Constant Questions

[MrsSz]

So providing all goes as planned (which, trust, I don't count on it) I will be headed back to live with DH while he pushes through medical school towards the end of the year. I mostly manage our finances, mainly because I'm a control freak. Haha. My question is about home loans and what not. I will have a full time job but obviously DH's portion of our life will come from medical school loans. I have no idea how the whole home purchase/mortgage thing works and tbh I don't want to look like a complete moron when I walk into the credit union to get some answers. If we are looking for something that can be sustained on my income alone, does he have to be on the loan? Would it be beneficial for him to be as his credit is better than mine? My hope is to have at least 5% down once we are looking, hopefully we'd be able to put more back with my end of year bonus. Does it even make sense to buy when we know that we could end up anywhere else in four years? The town where we would be looking is about halfway between both his med school and my work, but being a 40 minute commute for both of us be too much? I don't think so, but then again, I've never been in med school before. Am I being irrational in wanting a house? Or am I just motivated by the fact that everyone around me is doing it?! Haha.. who knows right? My ultimate question is that financially, does it even make sense? For all we know we could end up right here or a little further south for residency... oh my oh my.. I thought the acceptance to med school was going to make my madness a little more bearable, apparently not so much...


As always.. thank you for just listening to my rantings...



XOXO

Mrs. Sz

[spotty_dog]

If you can't put 20% down and you don't know where you'll be in 4 years (and trust me, you do NOT know for sure), buying a house sure seems like folly in this market. But then, I've been immersing myself in super conservative personal finance guides lately, and am in the process of paying down my home loan to 80% right now, so I'm definitely going to be your voice of "save, save, save".

Also, once he's in clinicals every commute minute counts. That said, my husband had an hour commute on his bicycle during residency and we managed.

[SoonerTexan]

In somewhat of the same boat, but even crazier than you, so I do know some of the answers!

Shop around loans--we found a broker was much more competitive than the Big Bank. Pre-qualifying gave us a better idea of what price range we can truly afford and is eye-opening as far as closing costs go. We applied together, but I could have applied alone (sole source of our income). If you apply together, be prepared to get proof of what his student loan payments will be (or how they will be deferred). Be careful of making any big financing changes while you are securing financing.

Check out the resale of the area you are looking in--does it have good schools? How long are homes sitting on the market? What are the prices trending? If we buy, it will be in one particular suburb because:

A. the commute is ideal for us both (to work and babysitters)
B. It has awesome schools
C. Due to awesome schools, renting out a home is easy if it comes to it (I know this because I looked at renting and everything was snapped up/above our price range). There are few apartments in the school district, so homes at the level we are looking for are popular with renters.
D. It has been a very strong market due to all of the above and homes sell quickly

Unfortunately, this also means there are only exactly 20 homes that meet our criteria (compared to 100+ in neighboring suburb and 200+ in another neighboring burb), and we have eliminated all for various reasons and are waiting to see what pops up. When something good did pop up last weekend there were 3 other offers on the FIRST day and we lost to a cash offer

Oh, and when you do look at houses, pay special attention to the age/condition of some of the big ticket items (A/C system, etc.). We walked away from one because the heat pump was 30 years old and we aren't prepared to have to plunk down $8k at any moment. No thank you!

[ladymoreta]

Oh, and when you do look at houses, pay special attention to the age/condition of some of the big ticket items (A/C system, etc.). We walked away from one because the heat pump was 30 years old and we aren't prepared to have to plunk down $8k at any moment. No thank you!

Yes! This bit us in the butt for 10k! Ouch!

I wouldn't recommend buying during medical school since you're almost guaranteed to move for residency. We thought we wouldn't need to move after residency, so we bought our house, and now we're going to be selling it for a bigger loss than we expected - so much that we may end up having to wait a few months into attendinghood to sell. If you're going from medical school to residency, it'd be much harder to come up with the difference if the value declines, because money will be even tighter then. (Yes, he'll have a salary, but 4th year costs a lot in terms of interviewing trips and stuff.)

[Michele]

Add me to the list of those against buying in medschool. We were lucky in med school bc it was before this current market. But we were stuck with our residency house for almost a year and we still lost a bunch of money on it. Now we are swimming in debt (not all related to the housing issue, but a good portion of it is directly related.) Mortgage plus rent, plus double utilities, costs to keep it show ready, foundation leak, and all the money we lost bc of the housing market....it added up fast! And we were in a location that really wasn't hit by the depression.

I'm not sure about your market, but here, you can rent A LOT more house than you can buy (unless you have a big down payment).

[peggyfromwastate]

I wouldn't buy. We ended up buying, and staying for residency. We will be in our house 9 years. We have benefited from home ownership in tax credits and having access to $ through a HEL if needed. And we are not underwater. We will come out slightly ahead.

But, I would choose renting if I could do it over. We have had lots of life changes, the market ups and downs are stressful, getting the house ready for sale is a full time job, there are ALWAYS home maintenance issues, I don't even blink at a job that is around 5-8K-- that's part of home ownership. If its not the HVAC, it's the leaky faucet, or the broken appliance, or the windows need replaced. Them there's the ever increasing prop taxes, changing utility rates, etc etc.

If you don't anticipate a lot of extra cash each month (at least $300) home ownership will put a huge strain on your budget.

[Deebs]

Let me first say this - we weren't married at the beginning of medical school, so I have a slightly different perspective. That said, even if we had been, I would have rented. While DH was in med school, neither one of us was ever home. We wouldn't have had time to repair anything or maintain a home. Renting really just simplified our lives a little. Take the money you would put toward a down payment and put it in an emergency fund - you'll be so glad you did.

[TulipsAndSunscreen]

We did buy in med school and even though we are losing some money, I am glad we bought. This house was in the perfect location for us (2 mins from school) and fit our needs well because I needed a home office.

I agree though that if you can't put 20% down, you may have to bring $ to the table to sell it in 4 years and that's money that you probably would have preferred to spend moving elsewhere.

Also, based on the above I'm biased but a 40 minute drive to med school seems far to me. Especially once rotations start that is a long commute. Plus factor in gas and parking costs.

[Bittersweet]

We bought in medical school, sold quickly and came out ahead. But there is no way I'd do it again in this market ESPECIALLY if I didn't have 20% to put down. I can't tell you how stressful and annoying it was to worry about selling when everyone else was just enjoying their final days as students and looking forward to the next step. And if you aren't able to sell the level of suck will increase dramatically. We are currently renting out the townhome we bought at the beginning of residency. It is still annoying but doable only because we could afford to use a property management company. Had we not put more than 20% down this is not something we could afford and the thought of dealing with small repairs and tenant BS on my own is just yuck. Long story short: unless you have a really compelling reason to buy don't.

[diggitydot]

We've lived in communities where a 40-minute commute isn't that bad. That being the case, it will seem pretty long during med school with clinicals and studying for important exams. When you can't just pop home for a quick meal or break, it makes the day seem REALLY long.

DH was super pissed that I wouldn't even consider buying a house when we moved for med school. Brand-spanking new homes down the street for our rental were $90K. Their price skyrocketed to $240K during the first three years we lived there. When we moved for residency those same homes had fallen to $70K. I've never been so happy to go against the conventional wisdom in my life.

[SuzySunshine]

We also did not buy in med school of course we lived in a ridiculously expensive area and could never have afforded to. We bought in residency but we were there for 7 years, if we had it to do over again we would have but not if our residency was shorter. We're still watching friends lose money on houses and the town we were in never really had a bad bubble. If you can only put 5% down I wouldn't do it, the odds are to high that you'll have to pay to sell it because you won't have any equity built up.


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[GrayMatterWife]

Didn't buy in med school but easily could have afforded to. Why the hell would you want to buy in med school? It's temporary (you'll move at match) and it is a headache to maintain with a ton of hidden costs. Rent.

[bokelley]

All of our family and friends(outside of medicine) think we are freaking crazy for not buying in this market since we know we will be here for 5 years. We have a great rental house at a steal of a price in one of the most wanted suburbs. To buy we would have had to spend every penny we make. Yea it sucks to look back and see how much money you spent on rent but in 5 years if we end up moving. It will be much easier. And when the basement flooded last year it wasn't us coming up with 10k to fix it.

[v-girl]

We bought (DH has a 35-40 mile commute -- at least an hour in traffic), but it's close to my family which was important so I'd have help with the kids. He did the MD/PhD thing so we knew we' be here a long time. It worked well for us -- 9 years for med school, 3 for residency, and 2 for fellowship. And we'll stay in it while we fix it up to rent out or sell so we can buy bigger for the real job. Yes, we managed to stay put the whole time!

[MrsSz]

Thank you so much ladies!!! All of this helps like you wouldn't believe. The commute will happen weather we buy or rent because my work is about 1 hour from school and I used to commute the 1.5 hours when he was in graduate school and it was rough. If we live in this area, it'll be an equal commute for both of us. Positive thing is that his parents live less than a mile from the school, so breaks and things like a quick bite are easier. I never even thought about renting a house... perhaps it could be a good move to rent it out later, but getting more of a sizable down payment makes so much more sense. I know that matching and residency will force us to move, but I guess mentally it seems so far away. When in actuality it isn't. I'm just glad renting can make sense too.

xoxo