(Closed) Advice Buying Home While in Graduate Med School

posted 7 years ago in Home
Post # 48
Member
3460 posts
Sugar bee
  • Wedding: May 2012

@Soladylike:  🙂  Thanks for the info.  (And yes, I would not expect the retirement money to count, unless we borrowed from ourselves to finance it, which we won’t do.  I was just wondering if they looked at overall net worth or anything.)
 
@RawHoneyBee:  It sounds like you are committed to doing this, despite the advice of most everyone here.  I would suggest that you create up a detailed budget before moving forward, both for monthly expenses, but also projecting costs of buying/selling a house (real estate agent fee, lawyer, stamps fee (a % per thousand charged by the state), title search), inspection fee, appraisal fee, mortgage application fees…  I have a *lot* of med friends, most in fellowships at the moment.  And the last thing any of them wanted was additional stress from house hunting.  I recognize that you think you’ll be able to handle it, and maybe you will.  Given that you are only 21, have you discussed your plan with your parents?  They may have some good advice.

Post # 50
Member
3109 posts
Sugar bee
  • Wedding: May 2018

This can’t be real! this is a 21 year old who supposedly makes 45k part time as a nutritionist who wants to buy a place with no realtor?! 

Yes, that is a great an feasible idea. 

Post # 51
Member
1747 posts
Bumble bee

@mamadingdong:  Let it go. Do not go there, it’s a beautiful Friday morning:0)

Post # 52
Member
3460 posts
Sugar bee
  • Wedding: May 2012

@RawHoneyBee:  You will still want your own lawyer.  If he just studies law, and he is not yet a practicing lawyer, he can get into *HUGE* trouble acting as a lawyer and doing your closing.  In one class in law school we had to draft a will, and the professor made a point of making sure we knew to tell the person we were drafting the will for that we couldn’t give them the end result – and detailing how it can prevent you from sitting for the bar.  Don’t let him do it.  Also, unless he’s actually a real estate lawyer, don’t let him do it.  I’m a lawyer, I have many lawyer friends and colleagues, and we all will have a lawyer do it rather than do it ourselves.

Post # 53
Member
2417 posts
Buzzing bee
  • Wedding: August 2015

@kay01:  I was just getting ready to type this. I’m not an attorney but I work for a law firm and I know the unlicensed practice of law is something we are constantly being told to make sure we don’t do.

OP, I would make sure that you use a real estate agent. They will help take a burden of stress off of you!

Post # 54
Member
3460 posts
Sugar bee
  • Wedding: May 2012

I number crunched for you.  10% down on $100,000, remaining $90,000 at 2.3% that you say you can get, at 15 year term that you want, is $591.67 a month.  Add HOA fee you say is $100-300, so let’s average at $200 (note, our 1-bed HOA fee is about $450, so your estimates may be low).  Total: $700 (rounded up the $8). 

$700*12 months*4 years = $33,600

with a balance of $68,486.66 left on the mortgage (used bankrate mortgage calculator).

However, you need to assume repairs at 1% property value, minumum for each year (average is 1-3% – I’ll use the lower estimate rather than the average, since the condo association will cover things to the overall building – probably through a special assessment, see below, while you’ll cover burst pipes, leaky toliet, etc.), so $4000 total. 

Don’t forget condo fees can go up and you can have special assessments.  We’ve had 2 special assessments in 8 years, averaging about $10,000 each time.  Our condo is worth more than the one you’re contemplating, so let’s cut that in half to $5,000.

Average closing costs in Oregon are $3,509 (this is for a $200K loan with 20% down, but if you look at the list, a lot of the fees are set, regardless of size loan) http://www.bankrate.com/finance/mortgages/2012-closing-costs/oregon-closing-costs.aspx 

Now you need to resell it.  Don’t forget you’ll pay 5-6% in real estate agent commission as well.  Estimating on the lower end, that’s $5,000.

So cost of condo is: $33,600 (mortgage) + $4,000 (maintence/repairs) + $5,000 (1 special assessment in 4 years) + $3,509 (closing costs) + $5,000 (realtor fee to resell) = $51,109

Equity in home: $90,000 – 68,486.66 = $21,513.34

That’s about $30K cost for the 4 years – which is roughly the same costs as renting, but with a lot more risk and stress associated with it.  Don’t forget we used the lower value for most of these items!  You can hope for a good outcome (condo value increases), but it’s best to plan for the worst (condo value decreases).

On final thought, I’m really not sure where you can get a 2.3% mortgage rate, but do tell so I can get one.  I think I’ve seen them at 3.25 or 3.5% the lowest.  This of course assumes you have great credit and lenders will be ok with your job history, down payment, etc.  Using those numbers, your monthly cost is: $843.39, increasing overall costs by $6882.72, to $57991.72, making renting a better bargain.

ETA: I forgot to add taxes and insurance!  http://www.PortlandMaps.com for actual taxes, it seems to be about $1000 is a good estimate on $100,000 house (less if older house, more if newer house someone commentated).  So add $4000 to the cost

I’m also just going to toss out a figure of $500/year for insurance.  You’d have renters insurance otherwise (right?), so lets just say the difference per year is $250.  That’s another $1000 to add to the tag.

So cost of condo is: $33,600 (mortgage) + $4,000 (maintence/repairs) + $5,000 (1 special assessment in 4 years) + $3,509 (closing costs) + $5,000 (realtor fee to resell) + $4,000 (taxes) + $1000 (insurance) = $56,109

Equity in home: $90,000 – 68,486.66 = $21,513.34

Total cost for four years is now about $35,000, or about $41,500 if you adjust the mortgage as I think more reasonable.

Post # 55
Member
3460 posts
Sugar bee
  • Wedding: May 2012

And finally!  About your plan to work in the summer, one of my med friend says you only get the summer off between first and second year, but you’ll usually have a requirement for research or a project of some kind that is required to graduate.  You’ll be in rotations in the summers between second and third, and third and fourth year.

The only time you’ll really have off is usually about a month between graduation and starting residency

Post # 56
Member
606 posts
Busy bee
  • Wedding: June 2011

@Soladylike:  Make that 3 posters who work for a bank. I am a credit analyst at a large national bank. I doubt we would be considering OP’s loan request. And I have no idea where she thinks she can get a 2.3% or whatever rate. I haven’t seen ANY loans with that favorable rate, and I’ve been working here 4.5 years. Even our high net worth clients with low LTV%s and plenty of cash flow do not get rates under 3.25%. I can’t see how a 21 year old medical student with variable work history and limited assets with a 90% LTV could get that rate.

@kay01:  I love you, haha. Great post(s).

OP, even if you could theoretically finance this, YOU WILL BE IN MEDICAL SCHOOL! I cannot reiterate strongly enough that you will not have time to deal with the frustrations that go along with it. I also don’t know any med students who hold a job during their schooling. Darling Husband studied literally 14-18 hours each day while he was in the first 2 years. He got 1 “summer” off, but it was maybe a month and a half. Do what you want, but I think you’re getting some pretty good advice on this thread.

Post # 57
Member
1695 posts
Bumble bee
  • Wedding: March 2012

@kay01:  THIS!!  I’m a lawyer and I would NEVER practice in an area I was not familiar with, much less as an unlicensed attorney.  Your brother could get in a lot of trouble for that.

Post # 60
Member
3460 posts
Sugar bee
  • Wedding: May 2012

@RawHoneyBee:  If you are still genuinely interested in receiving advice, per your original title, then post your revised numbers using $80,000 condo and calculations for how much it’ll cost each year based on the factors I pulled out above (e.g. 1% budget for repairs).  The bees can then check your math to see where you think you come out $33,000 ahead by buying over renting for a four year period, considering I showed you’d be roughly *behind* by $40k.  If on the other hand, you already made up your mind ((as I suspect you did before your first post) and do not wish to hear any advice against your choosen course of action, then good luck to you.

 

And you don’t get “nothing” for renting.  You get a roof for four years and someone to call when something breaks and you’re busy studying, who will handle the problem for you.

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