buying property while in med school

[bhop]

Does someone know...

Has anyone bought a house or apt while in medical school? Are there special mortgages you can apply for? How does it affect your student loans? What's the best way to go about it? Thanks!

---

Members don't see this ad.

 

[cfdavid]

Does someone know...

Has anyone bought a house or apt while in medical school? Are there special mortgages you can apply for? How does it affect your student loans? What's the best way to go about it? Thanks!

Remember that it's not always benefitial to carry a mortgage with no, or little income. You won't have anything to deduct the mortgage interest from! The deductability of mortgage interest, coupled with appreciating values, are the major benefits of home ownership. But, in most areas of the nation, we're seeing depreciating home values right now (surely cyclical, but...)

So, unless you can find a great deal, and provided it's your first time purchase, it may not be the best investment. Also, prices are expected to keep coming down over the next year or two (5-15% estimated), so perhaps hold off.

That being said, most med students and residents are surely in the first time home owner category (or future home owner), and that's a good place to be right now. Because, you won't need to worry about selling a depreciated asset in order to get a "good deal" in the current market.

 

[Dookter]

If you have the money to buy something outright, I would seriously consider it. However, if you have no money for a down payment and will financing the entire purchase, I would reconsider. Punch the #'s into one of those mortgage calculators. I did that and discovered in the time I was in medical school I would accumulate basically no equity. I would basically save just a LITTLE compared to renting, assuming everything went well [the market did not shift, I did not get killed by realtor fees, etc.]. I ended up just renting, and my apartment is not my problem, I never have to fix anything, and I am guaranteed to have much less of a pain in the butt doing it this way. Buying a home is a long-term process, so sometimes it does not make sense to do it until you have an income, are planning on staying in one place for a long time, etc.

 

[Catalystik]

Does someone know...

Has anyone bought a house or apt while in medical school? Are there special mortgages you can apply for? How does it affect your student loans? What's the best way to go about it? Thanks!

There is an excellent, thorough recent post on medical student property purchase in the pre-allo area of the forum. See: http://forums.studentdoctor.net/showthread.php?t=345033

 

[Droopy Snoopy]

Does someone know...

Has anyone bought a house or apt while in medical school? Are there special mortgages you can apply for? How does it affect your student loans? What's the best way to go about it? Thanks!

I think the answer's different for everyone and depends on lots of variables. If you're married or have a steady roommate, if you have a sizeable down payment, what your credit history is like, how much it would cost to buy a 'decent' house in your area vs. how much a 'decent' apartment rents for, how much time and effort you'll be able to put into those little things that apartment maintenance/your parents used to fix, are you a nontrad with a few years of salary savings set back as a buffer or are you fresh out of the frathouse, etc. etc. etc. I will say that either before first year or late fourth year seems to be the best time to buy, since buying takes considerable time and effort if you want to do it right.

My wife and I bought a condo just prior to M1 year. Made some mistakes, learned from them, and traded up roughly a year later once our financial situation was better and we knew the area more. My class is probably split 40/60 between homeowners and renters, so it's certainly not uncommon. But as mentioned before the market is effectively bottoming-out right now, so maybe waiting a few years will yield better prices and lower rates. A mortgage won't affect the loans from Stafford or whatever at all, don't know about private ones. And your loans (if deferred) won't affect your mortgage rate either; your lack of income will, though, since banks obviously don't count other loans as income. I'd check with some upperclassmen or your dean of students to see if there are any banks around who have partnerships with your school, that's probably your best bet for a good loan. There are first-time homebuyer deals around that help with down payments and such, should be loads of info on google.

 

[Sol Rosenberg]

Does someone know...

Has anyone bought a house or apt while in medical school? Are there special mortgages you can apply for? How does it affect your student loans? What's the best way to go about it? Thanks!

I plan to buy a(nother) house, but I plan to do it before I start, primarily because of the whole mortgage issue. I'm not aware of any special mortgages (at least mortgages that are beneficial) for medical students. Because your income is 0, you will need to, most likely, go with a "no doc." loan, which usually has higher interest rates than a normal mortgage. I don't think this affects your student loans at whatsoever.

Remember that it's not always benefitial to carry a mortgage with no, or little income. You won't have anything to deduct the mortgage interest from! The deductability of mortgage interest, coupled with appreciating values, are the major benefits of home ownership. But, in most areas of the nation, we're seeing depreciating home values right now (surely cyclical, but...)

The tax benefits of deducting mortgage interest are unlikely to amount to much for a typical first house anyway, if that is ALL that you are itemizing. Remember, you give up your standard deduction when you itemize. But yeah, with no income, you don't even get that (unless you have kid(s) -- you might qualify for the "thanks for trying" EIC, if you or your spouse has ANY income, but I won't pretend to be familiar with that.)

So, unless you can find a great deal, and provided it's your first time purchase, it may not be the best investment. Also, prices are expected to keep coming down over the next year or two (5-15% estimated), so perhaps hold off.

This VERY MUCH depends upon your specific area/market. While this may be true in severely overinflated markets like CA, AZ, and the Northeast, to name a few, housing prices are currently skyrocketing here in Austin, and this is being driven by REAL demand (i.e. the prices aren't being artificially inflated by out-of-city investors.) My advice would be to talk to realtors in your area and ask them about the market. Of course, you will get a biased answer, so do some research yourself about what housing prices are doing (tax appraisals are public record, and are often available online)

To the OP: Home ownership is an investment, and all investments involve risk. If you are in an area of the country where prices have depreciated, now is a GREAT time to buy (Remember rules #1, 2 of business: Buy low, sell high) so long as you don't think that prices will depreciate further in the next 4/5 years. Also, you can always rent your property if you have to move in 4 years. I do very well with my rental properties, have built lots and lots of equity in my 8+ years of any home ownership, and I think that owning lots of property is kind of a part of the American Dream. You need to do the math, make some assumptions, and decide how much risk with which you are comfortable.

I'd be happy to answer any more detailed questions that you might have.

 

[njbmd]

Moving to Finance & Investments for more comments.

 

[pballa24]

M1 here...settled on a 1 bdrm condo labor day weekend. ideally, i would have gotten a 2bdrm in downtown..but obviously, they were out of my price range. However, the city im in has got to be one of the few right now where the housing market is continuing to rise. its becoming a much bigger city and im hoping that given the location of my current place, i will end up in the positive. basically, i had enough down to cover a 1/4 of the cost and thats allowing me to comfortably use school loans to pay the mortgage and HOA fees. I just hated to see my money go down the drain in rent..especially when i could afford a place. although i must admit, i get kinda jealous when i see two of my classmates living at home and using their school loans to get nice cars! however poor of an investment choice that is...im a car nut so..it hurts.

 

[dpmd]

I agree that you need to take some time to make an informed decision that takes into account the variable that affect your situation. I was lucky to have a fiance that was paying the bills during first year. I was able to take out extra money in student loans that became our down payment. That allowed us to get mortgage for a condo in los angeles that was about the same as rent in an outlying city I was commuting from (when association dues were added in). We didn't make the best financing decisions and ended up with a no doc loan (with a higher interest rate) and PMI for a while. I was able to use loan funds to make extra payments to the mortgage to get rid of PMI faster, and soon after we married we refinanced when the rates were just about rock bottom. Now our mortgage plus association dues is less than our rent was and much less than what other units in our building are renting for. We plan to rent the condo out if we end up moving for residency. We could sell, as units are now selling for more than double what we paid, however it will be nice to keep a foothold in the area in case we want to come back (it will be even better if we end up making some profit, but I know that renting property is a risky thing so I am not relying on it).

I know other people whose parents either bought the house for the student with the expectation the student would pay the mortgage, or lent the student money to get a condo. If you can convince your parent to go that route I recommend putting the agreement in writing so that there are no misunderstandings.

 

[RRS]

but I would add that if you have parents willing / able to cosign for it, it might be more reasonable to do a conventional mortgage with it's lower associated fees.

I'm a physician and a real estate broker. I've helped a number of clients do this. The only big issue is how the joint ownership affects everyone's financial aid. Otherwise you can make all the payments and refinance once you have an income (or it's appreciated a bit). They can just quit claim (essentially say "it's yours. You have it" legally) it to you any time it works out.

If they treat it like a second home, they can deduct the mortgage interest, as well, since you won't need it if you don't have an income.


...and if you get another student or two to move in, that makes the whole scenario more appealing.

I don't want to bore everyone with the specifics. If you have futher questions, let me know.

 

[whopper]

Too early to say you're going to do residency in the area where you buy property.

You got to factor that into the equation.

If you move out of the area where you bought the property to do residency-you should be relatively comfortable that the property value will rise by the time you leave. Otherwise you're running the risk of losing some money on the investment.

Unless you are in a position where you'll be able to somehow be able to manage the property while in residency--such as have a friend or relative rent.

Trust me--in residency you're probably going to be majorly overworked. You probably won't have time and won't want to worry about things like a bad renter not paying rent when you're probably hundreds if not over 1000 miles away.

If you buy a property make sure you're not going to regret it later.