Buying versus renting

My husband is a fourth year medical student and we have started to think about buying a small house when he begins his residency next year. He's going to be doing family med somewhere on the East Coast, anywhere between Vermont and Virginia, most likely CT or PA. I will be working for at least the first year of his residency but then we would like to have children and I would like to stay at home. What experiences have you guys had with renting versus buying. We have enough money for a pretty good down payment on a small home.

[Auspicious]

I would definitely be planning to buy a starter house if I were in your shoes. (Actually I hope to be in your shoes in two years when my bf finishes school and starts residency, so I'm curious to see what everyone has to say, too.)

I think the rule of thumb (I've heard) is that if you can live in the house for at least three years, then it's worth it to buy. You're going to have to pay out monthly for housing either way--better that that money should go to mortgage than rent. Rent money is basically just flushed away.

I think for most people the hitch is the downpayment, but if you've even got that taken care of, I definitely say buy.

[migirl]

I think a big factor in the decision to purchase a home is how long you plan to be there. I don't know how long a FP residency is, do you plan to stay on in that location after residency? We bought our home knowing that we would be in it for the duration of our 6-year residency, and possibly longer. I've heard (I don't know if this is a hard-and-fast rule) that if you plan to be in a location for less than 5 years it may not make sense to buy, but I think that also depends on the real estate market of the area in which you're looking. I think there are some markets that are more conducive (i.e., more rapidly appreciating real estate prices) to a quick buy-and-sell than others.

I personally enjoy being a homeowner, it's nice to have a place that is "ours" and that we can decorate and change as we please. (Truthfully, I'm amazed to find myself saying this after replacing a broken washer, dryer, garbage disposal, garage door opener, and refrigerator all in the past 9 months! ) It does require some time and effort for the upkeep and maintenance, which is obviously one thing you don't have to worry about so much when you're renting.

If you have enough money for a down payment (which is no small feat, IMO!) and plan to be in your home for a reasonable amount of time, it might make sense for you to buy a home.

[Auspicious]

I've heard (I don't know if this is a hard-and-fast rule) that if you plan to be in a location for less than 5 years it may not make sense to buy,

I have no idea. Definitely believe Jane over me, since she's actually done this.

[mommax3]

I have always heard it pays to buy if you will be in the home at least 3 or 4 years, depending on the community and what kind of market exists there. We have been living on a four year cycle for the last few years and have so far bought and sold two houses, each lived in for four years. We have been here a little over two years and will be selling in another two years. We made money on our first house, came out even on our second, and probably will make some money on this one.

We have three cats, so we never considered renting too seriously because it would be hard to find a landlord that would agree to that many cats. It has been fun to have someplace that is "ours", but we have always known we were only there temporarily, so we haven't ever really gone all out decorating.....just enough to make it look nice and fairly neutral. I have a lot of ideas, but I am saving them for a house that I know we will be in for a while. So, if you buy, buy something that you can stand, decorating-wise, because it probably won't be worth it for you to do too much to it, other than paint. Pay attention to the school district, too, because even if it won't matter to you while you are there, it may matter to a potential buyer later on.

Good luck, and good for you that you have saved enough for a down-payment!

Sally

I've heard that 3-5 year rule as well. We were planning to be in our current home for around 4 years and felt it was good decision to buy at the time. We have now been her 7 years and our house has almost doubled in value -- due to "sweat equity" and a ridiculous real estate market. We are certainly glad that we decided to buy!
You may want to compare rent costs vs. mortgage costs in the areas you are looking in. We found that a mortgage payment was significantly less than rent for a comparable size house.

[SuzySunshine]

My DH and I plan to buy when we move next year for his residency, unless of course we end up somewhere ridiculously expensive like here! But his residency is 7-8 years so we know that it will be a good investment and I just cringe every month when we write those ridiculous rent checks, at least with a house that you own you can sell it when you're done with it or you have something to sell so that you can move onto something larger!

Good luck!

[PrincessFiona]

The 3-5 year rule is something worth listening too. In addition, you should also consider the location that you are moving to. What I would suggest (once you have your match results and know where you are going to end up) is contacting medical education at the hospital where he will be doing residency and seeing if they have any information about the type of housing that the residents choose. If not, they may be able to point you in the direction of the auxiliary there.....and some of the spouses would be able to share their experiences with you. (Make someone write a residency review here for the next person, btw )

We really, really wanted to buy when we started residency again in the states...there we were with two children...we were 'grown-ups' and we desperately wanted to own, not rent. At the end of the day due to not having the money for a down-payment, etc we did not buy and I'm glad that we didn't.

The IM residency was 3 years in length...which means that we wouldn't have really broken 'even' after paying the down-payment and 3 years of payments on interest, not principal. Also, there would have been the issue of putting the house on the market the last several months of residency and trying to sell it. Several people that we knew who had bought a home had a great deal of difficulty selling even though there was an annual influx of residents coming into the town. So...they were dealing not only with interviewing for post-training jobs, etc, they were trying to sell a home and secure financing for another home.

You have to be willing to take the risk that you may finish the FPresidency and have to move w/o having yet sold the home. This may affect your ability to purchase a post-training home.

At the end of the day, we did pay a bit more rent-wise than we would have if we'd bought a little house....but we did not have to pay realtor's fees of 7% to sell a home that we had only paid the interest on either. We were able to have the convenience of walking away at a certain date without looking back.

We did the exact same thing for fellowship. I understand about wanting to own a home, I really do..and now that we finally DO own, it is great....but I can honestly say from our experience that I am glad that we chose not to buy.

Any of you out there who have bought homes during med school/residency feel free to share your perspectives!!! This is a great topic.

Oh...didn't the law also recently change about having your student loans in deferment now count against you in the loan process? We may need to do a repost on that thread. Who had started that one????

kris

So...they were dealing not only with interviewing for post-training jobs, etc, they were trying to sell a home and secure financing for another home.

Oh...didn't the law also recently change about having your student loans in deferment now count against you in the loan process? We may need to do a repost on that thread. Who had started that one????

kris

Well, we'll be able to tell you about the buying one home while selling another deal in about six months. It doesn't seem to be such a big deal to be buying and selling at the same time EXCEPT that we are on such a tight timeframe -- we'll have to move by a certain date. I certainly don't want to deal with two mortgages at once! Kris makes a good point that if you will be looking at doing a fellowship or moving quickly, you should consider the turnover in the real estate market in the area you move to.

And we should be finding out more about the loans in forbearance issue and getting a mortgage soon, as well.

We bought, and I think we were the only ones in the residency class that did, but it was because Mike had sold a house in NC that he'd bought while he was there doing his 3 years of military service. It turned out to be a good thing--it sold within a month for $40,000 more than we'd paid for it after only three years, and we were able to buy something FANTASTIC in this small Arkansas town. The tax benefits are great too--it always gave us a nice deduction (which comes in very handy during residency!!). And mortgage rates are still really good--so if you've got the DP and will be there 3+ years, I'd say go for it! Good luck!

[Michele]

We went with the 3 year rule...but taking into account the local market...The place we bought was only on the market for 4 hours when we saw it and there were already 2 other offers on it!!! So I'm not too worried about our market. We've also decided to stay here longer...Russ is very content with going for a residency at UF so we're planning to just stick around here until it happens...and then I can try my hardest to get a residency here...it's not too promising, but if he's here I'll have enough time to worry about it. So we're going to end up here about 2 more years of med school...plus residency etc...he doesn't know how long it's going to be yet since he's not sure what he wants to do.

We wanted to buy several years earlier...but we were in undergrad and not sure where the med/vet school future would take us and we didn't have a down payment....we didn't even have one really when we bought, but we had enough wedding money and his parents cosigned with us for some special Florida KiddyKondo plan, so we were able to buy....For us it was a great choice...because we have a dog and G'ville isn't very pet friendly...we don't want to live with a bunch of students...I had to have 2 bathrooms, and we didn't have a lot to spend in rent....our mortgage is cheaper than the rents are going for....even though we have a 30 yr with nothing down.

If we are here as long as we are planning, we should have enough of a down payment (me working a few years), that we may be able to keep this townhouse and rent it out after we move....maybe even keep it long enough that our kids would someday use it....who knows...

For us though, the decision to stay here pretty much no matter what (whether or not I can get a residency here....Russ said UF takes a lot of it's own students), and that it's just a little townhouse, and our dog, and the length of time we'd be here, and the distant possiblility that we could keep this place...and the school systems...and of course the wedding money and the cosigning made it an easy decision to buy.