Buying a House as a Med Student

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bkpa2med said:
Let me give some people my example and the way I see it. The rent the home I am buying costs $750/month. My mortgage, including taxes and insurance will be $600.

4 years renting = $36000
4 years mortgage = $28800

I put down $8500 plus closing costs and what not = $11000 due to sellers concession. Besides the point, my mortgage balance will be ~$76k. Now minus about $4000 of principal I will pay in 4 years. This leaves me with $72k.

I am buying the home for $84k and it is worth about $92k at the moment. So lets say conservatively that I will sell it for $95k in 4 years, minus 5% realtors fee will leave me with $90k. Minus this from what I owe which will be about $72k, you can see that I'll be left with ~$18k. So I got my initial downpayment back and made $7k.

Subtract the $7k from $28,800 and I'm left with $21,800. You can see that is alot cheaper than renting. Mind you Erie, PA has an extremely low cost of living and whatnot, if housing were more expensive I probably would just rent. You need to look at the situation and compare and see if you will benefit.
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You're overlooking property tax, maintenance costs, utilities (lots of renters don't pay this). And if you have flooding, fire etc it is your headache, not the landlords', so you will have insurance costs as well.
Also if you are buying the home at $84k, it is worth $84k. Markets dictate value. It's not inconceivable that when you decide to sell, it may be worth $75k if your neighborhood becomes less desirable, or if housing markets tighten up. Like it or not, it's a risk. Perhaps a calculated risk, but a risk nonetheless. With a rental, you just walk away out of pocket exactly what you expected at the onset.
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Law2Doc said:
You're overlooking property tax, maintenance costs, utilities (lots of renters don't pay this). And if you have flooding, fire etc it is your headache, not the landlords', so you will have insurance costs as well.
Also if you are buying the home at $84k, it is worth $84k. Markets dictate value. It's not inconceivable that when you decide to sell, it may be worth $75k if your neighborhood becomes less desirable, or if housing markets tighten up. Like it or not, it's a risk. Perhaps a calculated risk, but a risk nonetheless. With a rental, you just walk away out of pocket exactly what you expected at the onset.
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he included taxes and insurance ... and utilites can be moot at some points b/c you have to pay them anyways and they will probably be similar (maybe not city utility of trash though .... )

Also its not uncommon to buy homes undervalue of the market (although it only hurts you if you have to turn around and sell it). Whatever the market dictates is a risk, you are right about that ... to bank on appreciation over 4 years can be hard to swallow -- esp in this market in certain areas! Most markets won't dictate a loss though overall .... but its all about the market and locations ...
 
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jota_jota said:
Yes, you are wrong, because you incur the student loan interest whether you rent or buy (assuming you use student loan money to pay your rent,) so you can neglect it when comparing the two. Make sense?
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I guess my point was that the mortgage is much more "expensive" for students than for people with actual income. That is to say, as a person living off of student loans, you're in no way looking at coming out at all ahead, no matter how you slice it. The only way to come out less behind would be to reduce your student loan allotment, not maximize it and "invest" it in expensive housing.

But you're right.
 
noelleruckman said:
Yup. Most likely if you bought the house at $84K, you can hope that you can sell it for $89K in 5 years. I know it happens that people get houses for below value occasionly (seller wants to get rid of it fast) but usually if the seller accepts your offer they think its likely they won't get more than one you offered any time soon.
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Actually, the long-term average rate of return for the real-estate market is more like 5%/yr, so the most likely value to expect after 5 years is $84k * (1.05)^5 = 107.2k. However, 5 years is not long-term by any means, so that expectation has a high variance, and more or less anything can happen. Lots of research can help you to discover which neighborhoods in which cities continue along the 5%/yr trend (or higher) even in the short-term and which don't. Just remember: location, location, location. One place to start: Find the best school district in the city (even if you don't have kids.) People will always want to move there, bolstering demand.
 
Quick question: In regards to a 15 yr. mortgage vs. a 30 yr. mortgage, why not go for the 30 year and then pay it off in 15 anyways? Wouldn't that equal less money paid in interest?
 
technically but your payment is alot higher for the 15 year so if your 30 year payment is 600, your 15 year would be over 1200 and doubling that each month is pretty hard to do as a med student/resident.
 
AggieJohn said:
Quick question: In regards to a 15 yr. mortgage vs. a 30 yr. mortgage, why not go for the 30 year and then pay it off in 15 anyways? Wouldn't that equal less money paid in interest?
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Often interest rates are lower for 15 year mortgages, so paying a 30 year off in 15 would still come out to be more expensive, but only SLIGHTLY more(today's averages from www.bankrate.com are 5.74% for a 30-year fixed and 5.51% for a 15-year fixed.)

But, I definitely agree with what mshheaddoc said about a 30-year being more practical for students.

If you have extra cash and are looking to pay down loans, like you describe, your student loans (at 6.8%) would be a better choice, however.

EDIT: Actually, your payment isn't necessarily "a lot" higher for the 15-year. I crunched the numbers, and came up with the following (assuming the rates above for the two mortgages, and a $100k loan):

30-year, payoff in 30 = $582.94/month
30-year, payoff in 15 = $829.87/month
15-year, payoff in 15 = $817.61/month

Total Interest Savings on the 15, payoff in 15 vs the 30, payoff in 15 is $2206.89 (over ALL 15 years, which = $147.13/yr)

(Yes, I have a lot of free time on my hands right now -- I'm "snowed in" here in TX, and somewhat bored.)
 
jota_jota said:
Often interest rates are lower for 15 year mortgages, so paying a 30 year off in 15 would still come out to be more expensive, but only SLIGHTLY more(today's averages from www.bankrate.com are 5.74% for a 30-year fixed and 5.51% for a 15-year fixed.)

But, I definitely agree with what mshheaddoc said about a 30-year being more practical for students.

If you have extra cash and are looking to pay down loans, like you describe, your student loans (at 6.8%) would be a better choice, however.
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I hate to keep asking specifics, but I know very little about these things.

It would be better to pay off student loans (at a higher apr), than to pay off your mortgage? Even considering you can postpone payment on your loans for a long time?

Situation: Med student with working spouse. They buy a 90k home.

Shouldn't the med student take out max loans to help pay as much as possible on the mortgage and get as much equity in the place as possible before they move (and sell) in 4 years? Then, when the student is a resident, they could begin to repay the student loans...

Or would it be better to take out as little in student loans, and just make minimum payments on the mortgage?

And why? :)
 
AggieJohn said:
I hate to keep asking specifics, but I know very little about these things.

It would be better to pay off student loans (at a higher apr), than to pay off your mortgage? Even considering you can postpone payment on your loans for a long time?

Situation: Med student with working spouse. They buy a 90k home.

Shouldn't the med student take out max loans to help pay as much as possible on the mortgage and get as much equity in the place as possible before they move (and sell) in 4 years? Then, when the student is a resident, they could begin to repay the student loans...

Or would it be better to take out as little in student loans, and just make minimum payments on the mortgage?

And why? :)
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My response was solely based on paying the minimum amount of interest possible (considering only the interest on student loans and mortgage loans.) To pay the minimum interest, simply pay down the highest rate loans first. As of today, student loans carry a higher rate than the average 30-year fixed mortgage (especially since you said that you have a working spouse, so you can deduct your mortgage interest,) so you should pay those down before the mortgage.

If you have "extra" money from your student loans, a house would be the WORST place to put it, because you "earn" money through the appreciation of your property value on the total value of the property REGARDLESS of the amount of money that you owe on that property (i.e. you earn on the total value of your house, not just your equity.) If you take that extra money and use it to pay down your mortgage, you are substituting borrowed money at a higher interest rate for borrowed money at a lower interest rate.

Therefore, I vote for this scenario:

Or would it be better to take out as little in student loans, and just make minimum payments on the mortgage?
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jota_jota said:
Often interest rates are lower for 15 year mortgages, so paying a 30 year off in 15 would still come out to be more expensive, but only SLIGHTLY more(today's averages from www.bankrate.com are 5.74% for a 30-year fixed and 5.51% for a 15-year fixed.)

But, I definitely agree with what mshheaddoc said about a 30-year being more practical for students.

If you have extra cash and are looking to pay down loans, like you describe, your student loans (at 6.8%) would be a better choice, however.

EDIT: Actually, your payment isn't necessarily "a lot" higher for the 15-year. I crunched the numbers, and came up with the following (assuming the rates above for the two mortgages, and a $100k loan):

30-year, payoff in 30 = $582.94/month
30-year, payoff in 15 = $829.87/month
15-year, payoff in 15 = $817.61/month

Total Interest Savings on the 15, payoff in 15 vs the 30, payoff in 15 is $2206.89 (over ALL 15 years, which = $147.13/yr)

(Yes, I have a lot of free time on my hands right now -- I'm "snowed in" here in TX, and somewhat bored.)
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nice! only a few couple hundred more is nice with the lower rates (which is another GREAT reason to own a house with these low interest rates). If you are that bored, want to do the analysis for me of buying one home then moving up in a comparable location to a bigger house including HUD-1 closing costs? :laugh: To show that having your equity can help? ;)

I'd like to do an faq on mortgages and how to figure out payments and stuff like that for those who have no clue. These threads are great for discussion but if you don't know where to start they can be confusing.
 
Law2Doc said:
I guess I misread. But then his combined mortgage/tax/insurance figure sounds way too inexpensive compared to the assessments and homeowners insurance premiums I am familiar with.
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Actually they are right on ... I've had a similar mortgage payment for that amount. Many people overestimate HOI and taxes ... usually most use good underwriters will use 1.25% of your home value as your basis for HOI and 1.00% for your taxes. That is being very conservative. Now, if you are in a high property tax area obviously, things will change ... like NJ for instance. But that rule of thumb works on most housing markets.
 
Law2Doc said:
I guess I misread. But then his combined mortgage/tax/insurance figure sounds way too inexpensive compared to the assessments and homeowners insurance premiums I am familiar with.
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Taxes: $1110/yr

Homeowners insurance: $477/yr

It is really inexpensive to live in this area. :love:
 
noelleruckman said:
....We own but if it were just me and my hubby we'd rent. I'm guessing we probably save money on mortgage vs renting but we probably spend more once you figure in maintenance, etc. I'm happy with owning. I like feeling like the house is mine and I can pretty much do what I want with it. It wasn't a fixer upper in any way, but its amazing how much work you realize a house needs once you move in. We plan on doing a lot of things to it before we leave it, but we're hoping to stay in it during residency as well (obviously I'll make my decision in residency based on more than the city its located in, but that will be a factor.)

Selling is a pain. Especially if you haven't lived at the house long enough to build up some equity. Selling our last house was a huge dissapointment. Everyone wants to rip the seller off and if you haven't built up equity, this is a problem. Not only do you have to pay the realtor's costs, but the buyer wants you to fork over money to them for closing costs, carpet allowance, etc. Then you have to decide if its better to sell right now or wait and then be ripped off 3 months down the road... (we were carrying two mortgages for a few months when we sold the last house, not the best way to do things) And then it is very difficult to keep the house viewable. I'm not the neatest of persons, and having two children (three if you count my hubby) just makes everything messy. Realtors don't always call in advance and I had one very embarassing experience where the house looked like a tornado had hit and a realtor stopped by. I didn't know anyone had looked at the house till the next day!

Buying is a pain as well. Anything in our price range looked like crap. Anything that didn't look terrible had foundation issues or something like that. Our price range went up $30K from the time we started looking to the time we bought and we didn't notice a huge change in the quality of houses we looked at....
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Oh man. Deja vu. That's exactly what we went through three (3) times in the last six years because of medical school and residency. To say it sucks would be an understatement. Let me also add that in Durham (and every other big academic medical town probably), a lot of the buyers know that you are a resident and are up against a hard deadline to move.

Moving under the gun has been probably the worst experience of medical training, and that's saying a lot. Not only because it sucks but because it has been hard on my wife to uproot and move so often. It almost makes me regret my decision to go to medical school.

Oh, and my wife hates our new house. It is pretty crappy but it's all we could afford in a good school district what with the damage our finances have suffered over the last six years.
 
AggieJohn said:
I hate to keep asking specifics, but I know very little about these things.

It would be better to pay off student loans (at a higher apr), than to pay off your mortgage? Even considering you can postpone payment on your loans for a long time?

Situation: Med student with working spouse. They buy a 90k home.

Shouldn't the med student take out max loans to help pay as much as possible on the mortgage and get as much equity in the place as possible before they move (and sell) in 4 years? Then, when the student is a resident, they could begin to repay the student loans...

Or would it be better to take out as little in student loans, and just make minimum payments on the mortgage?

And why? :)
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So I feel that maybe my earlier advice was a little off track after reading this post. My advice to pay as much as possible on your mortgage every month really only applies to those that are working rather than borrowing money to live on. As a student (unless you have a second mortgage that has an 8.75%interest rate like I do) it makes sense to pay as little as possible on your mortgage and just take out less loans. I agree completely with jota, don't borrow more money to get more equity in your home.
 
....and of course, Subsidized Stafford Loans effectively carry a 0% interest rate while you are in Medical School, so you need not begin paying those back until residency, of course (but at ~8k/yr they are usually not the bulk of people's loans anyway, I'm guessing.)
 
Of course, as others have said, which option (renting or buying) is best depends on a number of different factors including your location, your income, etc.
One important point that has not been mentioned yet is that the money you have "invested" as a downpayment might be better invested in the stock market by a trusted financial advisor. You are losing an opportunity to invest that money in a place where it might earn a higher return.
For example, I have owned my place for 10 years, so I bought low and have been around for the big recent increase in real estate values, the best case scenerio you could hope for, really. My property has more than doubled in value (I paid $100,000, now similar places in same neighborhood are selling for well over $200,000).
I was discussing finances with my brother, who instead invested his money in the market and rented. (We started out basically the same when I bought my place). He did well, but not uncommonly well, given the lull in the market a few years ago. When I sell, we will basically come out even. However, he did not have to deal with the hassle of homeowners' association meetings, roofs leaking, appliances needing repair, air conditioners breaking in the heat of summer, basements flooding, etc.
When I sell my place, I will once again return to renting.
 
Dude it ain't that easy.....all your financial calculations are theory. So much could happen you can't anticipate. Where is you capital gains tax? realtor fees/ commission? Local tax?! Plumbing, painting, furance, a/c problems...what if you have pest problems that cause damage? What if the local gov installs new sewers? who do you think will pay for that? When rates increase + less buyers....so much to consider!
 
Yeah Always BUY....NEVER RENT.

Houses always increase 20% per year and it is so easy to get a mortgage loan. In fact Lending Tree makes it so easy....oh and mortgage brokers never lie heck they do it for free...

...in fact I looked at the Good Faith Estimate and didn;t see any yield spread so I guess I really pulled one over the mortgage company (meanwhile the loan officer is laughing that he made an extra half point on my $300,000 loan [$1,500] because he does not have to disclose ysp. on core loans acc. to RESPA)

...yeah and qualifying for a loan is easy....and sooooo simple.
 
smugtroll said:
Yeah Always BUY....NEVER RENT.

Houses always increase 20% per year and it is so easy to get a mortgage loan. In fact Lending Tree makes it so easy....oh and mortgage brokers never lie heck they do it for free...

...in fact I looked at the Good Faith Estimate and didn;t see any yield spread so I guess I really pulled one over the mortgage company (meanwhile the loan officer is laughing that he made an extra half point on my $300,000 loan [$1,500] because he does not have to disclose ysp. on core loans acc. to RESPA)

...yeah and qualifying for a loan is easy....and sooooo simple.
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And just cuz there are places claiming to let you refinance for 5% means that you should be able to get that kind of a loan from the beginning, afterall 1)I've got excellent credit and 2)we're going to be doctors some day and banks will drool all over us.
 
All you need is a 700+ credit score and a no doc/no income check mortgage. Just say your self employed. It's not that hard to get a mortgage.
 
Imagine this

So you closed on your new home. Your so proud of yourself because the appraisal came in at $200,000 and you got your home for $180,000.

A few months go by and your deep in your first year. It's February and 10 degree outside....then the water heater explodes and makes a huge mess in the basement. Your thinking....well I don;t have $500 right now to have it repaired so I'll just do it myself. You take a fozen shower for the rest of the week until Saturday morning when you drive to Home Depot. After consulting the plumbing guys you spend the rest of the day replacing your water heater.

After $200, 5 or 6 trips, you take a nice hot shower and wash the grease off you face from a hard day's work! Great job you think. I really showed those guy from Home Depot that a med student like me can do just a good a job!!!

Later...your sitdown and realize that anatomy is going to take a little more time that you anticipated. You look at the clock....10pm on Saturday....crap! THEN YOU REALIZE THAT YOU SPENT THE ENTIRE DAY WORKING ON THE PLUMBING IN YOUR HOUSE WHEN YOU SHOULD HAVE BEEN BURIED IN THE LIBRARY!!!!!!!!

That is how your going to have to sweat and work for that equity!!!!

So go buy a house!
 
bkpa2med said:
All you need is a 700+ credit score and a no doc/no income check mortgage. Just say your self employed. It's not that hard to get a mortgage.
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yeah I am self employed and when I shopped for a mort. they wanted tax returns, a letter from my CPA, and proof. Do you think a bank is really going to lend you $100,000+ based on what you say? You think they just hand the money out?
 
smugtroll said:
yeah I am self employed and when I shopped for a mort. they wanted tax returns, a letter from my CPA, and proof. Do you think a bank is really going to lend you $100,000+ based on what you say? You think they just hand the money out?
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I wasn't even able to get my furniture financed this fall with my 700+ credit score. I didn't have a job so they wouldn't give me any credit. I had to come back with my husband the following day in order to get the credit approved. That was actually pretty humiliating for me. I had never had that experience before.
The bank did love me last year when it came to giving me a mortgage. (Both my husband and I were employed at the time) They drooled all over my credit score.... but that didn't drastically improve my loan interest rate. The best I could get was 6.75%. I wasn't particularly impressed.
And then I got notice from my bank that they could refinance and drop my interest rate down a lot. That actually sort of ticked me off.
 
smugtroll said:
yeah I am self employed and when I shopped for a mort. they wanted tax returns, a letter from my CPA, and proof. Do you think a bank is really going to lend you $100,000+ based on what you say? You think they just hand the money out?
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You ever heard of quickenloans.com?:sleep:
 
Dude..

Perhaps I should have expanded when I said I was self-employed...

So your implying that quickenloans.com does not require income documentation when underwriting a loan? They don't need any proof?

That means that Quickenloans services their own loans, right? Unless the mortgage company is a huge bank 99% of the time a mortgage bank is going to sell your loan to another bank. The reason they sell the loan is to make additional revenues. The bank gets paid to sells loans to other banks.

In order to sell a loan (like yours) the mortgage bank that originates the loan must abide by a general set of underwriting guidelines to approve the mortgage. In other words Quicken uses rules that Wells Fargo makes so that Quicken can turn around and sell the loan to them for a fast profit. Wells Fargo doesn't want a bunch of risky loans so they make the rule. Countrywide, Chase, PNC, are just a few of the huge mortgage banks out there. Everyone else is just a starts the loan and the biggies buy them up on the secondary mkt.

So you saying Quicken doesn't check income requirements is wrong. They don;t service their own loans...unless you believe some hack on the phone y...you better stick to chem and bio...






They don;t sell their loan off to Countrywide or Wells Fargo?
 
I really don't care who the sell my loan to, everybody does and I don't really care about what you have to say. I know that it is possible to get a loan with no income check and no doc if you have excellent credit and that's all I'm trying to tell the OP.

Don't hate the playa, hate the game.:smuggrin:
 
bkpa2med said:
I really don't care who the sell my loan to, everybody does and I don't really care about what you have to say. I know that it is possible to get a loan with no income check and no doc if you have excellent credit and that's all I'm trying to tell the OP.

Don't hate the playa, hate the game.:smuggrin:
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ok, you win
 
Panda Bear said:
I have to laugh. Now, if it was $500 less per month I'd be impressed but $100? That's chickenfeed. Some of my friends go out a few times a month and blow that much on drinks. You're going to lose that several times over every month just in maintenance. Not to mention increased utility costs.

But if you can turn a profit renting it (which given what little you have told us seems doubtful) that's fine.
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i'm with Panda
 
smugtroll said:
Dude it ain't that easy.....all your financial calculations are theory. So much could happen you can't anticipate. Where is you capital gains tax? realtor fees/ commission? Local tax?! Plumbing, painting, furance, a/c problems...what if you have pest problems that cause damage? What if the local gov installs new sewers? who do you think will pay for that? When rates increase + less buyers....so much to consider!
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I'm not necessairly disagreeing with what you are saying, but you obviously haven't owned (or at least sold) a home yet. There is a capital gains tax exemption on your primary residence for up to $250k of a capital gain.

You are also exaggerating all of the things that go wrong (typically) with a house. Of course there is risk of things going wrong and losing money -- like someone else said, all investments have risk. Without risk there is no reward. If you don't like to take risks and enjoy just spending your money on rent with 0 variance and no potential for gain, that's fine, but there's no need to spread misinformation about home ownership.
 
jota_jota said:
I'm not necessairly disagreeing with what you are saying, but you obviously haven't owned (or at least sold) a home yet. There is a capital gains tax exemption on your primary residence for up to $250k of a capital gain.

You are also exaggerating all of the things that go wrong (typically) with a house. Of course there is risk of things going wrong and losing money -- like someone else said, all investments have risk. Without risk there is no reward. If you don't like to take risks and enjoy just spending your money on rent with 0 variance and no potential for gain, that's fine, but there's no need to spread misinformation about home ownership.
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:thumbup:
 
Some of this is just really doing your research about costs concerning the particular house you are interested in. Undoubtedly older homes are going to require more maintenance. A home that is 20 years old or less will probably not require a whole lot of maintenance.
However, even in a newer home, there are obviously things that must be planned on. For instance, although my roof was in decent condition when I moved in, and the home had been recently painted, sometime before we sell, I'll end up replacing the roof and repainting the house. But I'm not stopping there.... If I can stay in this house during residency and even longer, when I leave, there will be wood floors, new windows (top quality) new air conditioner/heater system, (probably electrical) new water heater, new carpet, completely refinished bathrooms, probably new cabinets, maybe an additional sunroom added, etc. This house will be so cool when I leave that I will probably not want to leave, though I'm guessing by that time, we'll want something bigger.
Obviously not all of that is maintenance, but if you move into a house that doesn't have a new heater, air, water heater, roof, etc, and you live there for 5-10 years, your gonna have to expect to replace it before you move out, just to make it sellable. I think water heaters are only good for about 5 years and air/heaters aren't good for a lot more than 10 years. A roof isn't good for much more than 10 years. Plus.... even though we bought new appliances when we moved in here, in 8-10 years, they're gonna be old and probably not very desirable.
So, although costs for the a/c, heater, water heater, appliances aren't terrible, they definitely add up. And a roof (depending on the size) can cost $5k pretty easily.

I hope I'm patient enough to stay in my home a few years after I do all this stuff so I can actually enjoy it, rather than wait till I need to sell.
 
cubbbie said:
A few people have said be sure to research things thoroughly about the market and where you're buying. How is this done?
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This isn't really researching the market, but when I first started looking at houses in a specific zip code, this website was very useful http://www.zillow.com/
 
jota_jota said:
I'm not necessairly disagreeing with what you are saying, but you obviously haven't owned (or at least sold) a home yet. There is a capital gains tax exemption on your primary residence for up to $250k of a capital gain.

You are also exaggerating all of the things that go wrong (typically) with a house. Of course there is risk of things going wrong and losing money -- like someone else said, all investments have risk. Without risk there is no reward. If you don't like to take risks and enjoy just spending your money on rent with 0 variance and no potential for gain, that's fine, but there's no need to spread misinformation about home ownership.
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okay, point taken....I confess I don't own a house (yet). I guess I thought I was helping you guys out..

yeah I did exaggerate about all the stuff that could go wrong with a house...I mean real estate has performed better that the S&P500 since the tech bust...
 
My husband and I purchased a duplex my first year of med school. We did a lot of researcher before hand and chose our neighborhood and property carefully. In three and a half years it doubled in value. We eventually took equity out and have purchased a single family residence in the same neighborhood which has also appreciated well. We now rent out both sides of the duplex and it more than covers itself and its expenses and a bit of our mortgage on our other property. I realize that equity isn't "free money" but it can be used wisely and will certainly make purchasing a home in our next destination (where ever that may be) easier.
Every persons circumstances are unique. I have plenty of other med student friends, some single and some married, who have purchased homes or condos and have done quite well with them. Real estate is not a sure thing and it does take work to own a house. I personally loved having little house projects to do as a break from studies. I did a lot of cosmetic renovations to the apartment that we lived in in the duplex and it now rents for much more than it would have. And I love having a home that is my own... I love painting the walls whatever color I want to and having a garden that I can plant and flowers that will come up every year.
And BTW we did our first purchase on a no documentation loan based on our credit scores which were very good even though we were young. If you are thinking of buying a home now or in the future, I would recommend first learning about credit scores and how to increase yours. Our first loan was literally based only on credit score and was at a good rate for the time.
 
Exactly, no doc loans rock. I just got one for the property I purchased at a rate of 6.125% for 30 years. All that they wanted was my credit score and since it was 750 they didn't need any further proof for income and assets. You can get many things done if you know what you're looking for in a home.
 
No docs rock, but most people can't qualify for them (especially med students in particular) due to their heavy debt load and minimal credit repayment history which weighs down the credit score well below the 700 minimum that most companies require (well some require 680 but I wonder if you paid points what type of rate you'd get ...)
 
I swear by Countrywide...they required a "2 year letter" for my self employment from my CPA which was in reality only 1.5 years but they never said a word and rate stayed the same. However, this may be attributed to the fact that the house apprasied about $9k over sales price.

anyhow I was very pleased with them back in 02
 
No docs are great if you need it, but be sure you need it. I think they tend to be a higher interest rate, so if you can qualify for a regular loan you might be better off.
 
dpmd said:
No docs are great if you need it, but be sure you need it. I think they tend to be a higher interest rate, so if you can qualify for a regular loan you might be better off.
Click to expand...

Of course, if you can provide all the docs required without a problem that is your best bet. :thumbup:
 
smugtroll said:
I swear by Countrywide...they required a "2 year letter" for my self employment from my CPA which was in reality only 1.5 years but they never said a word and rate stayed the same. However, this may be attributed to the fact that the house apprasied about $9k over sales price.

anyhow I was very pleased with them back in 02
Click to expand...

That's not really a no doc loan. That is a Stated Income/Stated Asset loan.
 
The rates are not bad, just higher (by 3/8 of a point to one point depending on how much financial info you document). I was talked into a no doc loan when I bought my first house, then found out later we could have qualified for a regular loan for about half a point less (not a huge deal, but money I could have kept nonetheless). Some mortgage brokers will talk you into a no doc just so they can get more money by getting you a higher rate.
 
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