Where to live during med school.

Hello all.

Hope I can get some advice from those with more experience.

DH is starting med school this fall, and has acceptances at 4 schools. We still haven't decided where to attend, but we do know we have to sell our current house. We have two sons, who will be 5 and 18 months when school starts. We will be in our early 40's by the time he gets to residency. ( gah! 40? how the heck did that happen?)

I've been staying at home since our oldest boy was born, so basically I am starting all over too, which means not much in terms of salary.

We have a couple options as far as we can see.

Buy a small house or condo and keep the equity, and probably sell in 4 years.

Do the student housing thing, if we even get it, and put the money from the sale of our current home into an IRA and savings for things like a third child(and food LOL).

I don't see an apt as an option, unless it is as convenient and similary priced as the campus housing.

Right now we are leaning towards the campus housing. THe location can't be beat, plus, the campus housing communities are supposed to be diverse culturally, and we find that very attractive.

Has anyone lived on campus with kids?

We haven't lived in an apt for over 10 years now, and I am sure there are things we have forgotten that make it less than attractive.

Will they even let you have an IRA or savings in terms of financial aid? We just starteed working on the FAFSA,so we don't know much about that yet.

Thanks for any responses

[Vanquisher]

we've refinanced twice! The first time, we borrowed enough money against the equity to buy a minivan, and the second time we paid off nearly all of our credit card debt.

How long did you wait to refinance? I wonder if it would be in our best interest to do it as well. We have some nasty credit card debt that has accrued over the past 9 years. Thanks for any advice you can offer.

[Vanquisher]

We also did an ARM - a 7 year. I'm wondering if we should have gone with the 5 year after all. We were worried about any overlap, but I guess we shouldn't have been. WE know we will be gone in 5 years anyway. I think I need to talk to some financial guru about this.

[Vishenka69]

I think first you should look into all possible housing options. Most of the med schools DH applied to had separate housing for married students and those with kids. It usually wasn't attached to the hospital and was a bit more removed and offered a lot more space. Very often if it's not enough space for your family or there isn't enough housing for everyone, the schools will give a monthly or annual assistance with nearby housing. The figures I've heard about (from students receiving such assistance) were $200 a month and $10,000 a year. We chose to rent during med school in a subsidized bldg for married students/residents, but DH went to school in NYC where buying is virtually impossible and we don't have any kids.

[samssugarmomma]

My two cents is to consider buying. Next, married student housing.

If you need to be reminded of what apartment living is like, just let me know. Just off the top of my head I think of - neighbors that fight and yell so loud you can hear them through the walls, having to lug all of your stuff/groceries from the parking lot to your door, no backyard/limited room for the kids to play, the people that live above you might do it like rabbits and wake you up for hours on end in the middle of the night....the list could go on....

[houseelf]

You have already received great advice here, but I hope that you don't mind my adding .02. Financially speaking we have made some poor decisions, some fantastic decisions, and some so-so decisions. In our case, one of the most fantastic things we ever did was buy a house. We are in a crazy real estate market which has yielded us an incredible amount of equity in our home. Sure, not every market is the same, but our mortgage payment is cheaper than rent and the equity in our house is one of our only assets at this time.

I would urge you to seriously consider buying again. Have you talked to a tax advisor? You might get hit with capital gains tax if you sell your current home and do not reinvest it again. There is a good chance that I could be completely wrong about this, but you don't want Uncle Sam getting a cut of your cash.

Best of luck.

Kelly

Alison, I think it depends on a lot of factors. One of those being the real estate market in your area. When we bought our last house, the market was appreciating so quickly that we would not have been able to afford the same house only a year later. Over 7 years our house doubled in value (and that accounts for real estate comission and closing costs). But, not every market is like that.
I think it also depends on what your closing costs are, your rate, how much you put down, etc. I've also heard that figure -- 3 to 4 years to recover the closing costs -- but assumed that was the amount of equity you added through monthly payments equaling the closing costs and not any appreciation. I'm not sure though.
Some reliable personal finance websites like smartmoney.com and kiplinger.com might clear things up a little.

[houseelf]

I've heard that three years is supposed to be the minimum amount of time that you should stay in a place if you are going to purchase a home. As with everything, I'm sure that this is dependent on many variables. Further, the national average for real estate appreciation is about 4%. So even if you aren't in a "hot" market like Denver or MSP, you will still come out ahead. Also, don't forget the tax break. It can be a sizeable advantage.

Kelly

[mommax3]

We have moved every four years since buying our first house, and we are now getting ready to sell our third! We haven't ever lived in a "hot" market (Indianapolis, San Antonio, and Wichita Falls ) but we made quite a bit of money the first time, broke exactly even the second time, and anticipate making money this time, even factoring in realtor costs and closing costs.

It was definitely cheaper as far as monthly payments for us to buy during med school.....the apartments we looked at were ~$800 dollars (this was 12 years ago) for very little space, and our first house payment was something like $448/month for 1100 sq. ft. After we had kids (and pets) we never looked back and so far, it has been a good choice for us.

Sally

Not having to pay for repairs (possibly expensive, just ask me about sewer lines), shoveling, mowing, etc are nice benefits of renting.
In addition to walking away with a nice chunk of money, owning benefited us in other ways. We had a fairly steady payment (fluctuations due to increases in property tax) and had a bigger living space that was closer to the hospitals than anything we could have rented. Rent for something comparable would have been 1 1/2 to 2 times as much.

As to the equity, three ways come to mind to add to equity. One, through your monthly mortgage payment. Two, through making improvements and adding to the value of your house. Three, through the real estate market going up. There might be other ways that just aren't coming to mind. You can tap into the equity through a loan against it (home equity loan) fairly easily.

I think it is a wise decision to buy a house as well. We couldn't afford it in the area where we lived during residency, but if we could, we would have made a lot of money since the appreciation rates in our area ran around 20% per year. However, keep in mind that there is always the chance that the market will turn in those 4 years and if you did need to move at a time when prices were dropping, you stand the chance of losing a lot of money as well. I've had a lot of friends who were forced to move in the 90's because of their jobs and since the California market was in a deep slump at that time, they lost a ton on their homes. But, if they could have sold a few years later, they would have made a lot of money. I guess timing is everything! I would suggest doing a lot of research in the area where you are looking to move to find out what the appreciation rates are and what the market trends have been over the last several years.

I'll have to agree with Allison about the apartment living. Its not always bad. When we moved to our current place, a duplex, we did a lot of research and driving around. Our landlord is great and we were able to talk him into lowering the rent. He likes to have a responsible family as a tenant, and we love the place. And, just yesterday something went wrong with the plumbing causing sewer to back up into the basement. It was very nice to be able to say 'not our problem!' We don't have to do any shoveling or mowing. Right now we are enjoying it, though of course I do see the many advantages to owning a house.
On the other hand, before DD was born, we did live in some really awful places. It pays to look around. I don't know what living on campus in med school would be like, but if its anything like college I don't think I personally would even think about it.
Good luck, what a exciting/stressful time!

Thanks for all the replies!

We are leaning towards a condo or small house, and are meeting with our real estate agent to talk about selling our current place.

Where does one find a financial planner person?.

[DCJenn]

We found ours through our bank. We paid a monthly fee for the first year and now have a maintenance plan. (the monthly fee accompanied monthly meetings) it was very helpful to get everything aligned.

Jenn

PS- I couldn't help re: where to live during medical school, since we got married the day after he graduated!