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Home Buying Dilemma

Home Mortgages and Home Buying Home Buying Dilemma

  • Avatar EMDoc 
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    Status: Resident, Physician
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    Joined: 02/15/2016

    3 years out of residency.  I am not in a rush to buy, but my student loans should be paid off in a few months so I am more seriously looking into buying a home.

    Household income is just over $600k.  The market is currently somewhat volatile for my specialty, but I think for the future I can expect a household income of at least $500k.

    We currently live in the suburbs of a major city.  However, I am pretty unhappy here.  After 3 years, I am still having a hard time finding people we connect with – culturally I just feel we don’t identify with the community.  We can find a home in suburbia that meets our needs for $500-750k.

    Or we can move into town.  Homes in the area I would consider buying are selling for $1-1.3M. Is a $1M home completely unreasonable if it is 2x our income?  The size of that mortgage makes me pretty uncomfortable to be honest.

    I love the idea of buying at a lower cost and paying off relatively quickly – being debt free.   But, I am also having a hard time reconciling working and putting so much of my hard earned income into a home in a community I don’t love.

    Thoughts?

    #214786 Reply
    Avatar Anne 
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    Status: Physician
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    If you are unhappy with suburbia, why not rent something in the city to see if that is a better fit for you before you consider buying there?

    jfoxcpacfp jfoxcpacfp 
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    I think you should move into town where you are more comfortable (hopefully) and (also hopefully) closer to work. However, I don’t think you should buy a house for a couple more years. Given that we’ve just met, what I’d recommend is that you rent for a couple of years, save like crazy (after all, you’ll have no debt, right?) and aim for a down payment of 40% – 50%.

    No, you won’t be wasting money on rent (impo). You will be saving and learning about your area and where you truly want to live, then have a much lower mortgage payment. That will give you some $$ to buy furniture, fix up all of the areas that will magically appear once you are on the deed, and also help you qualify for better mortgage terms, mortgage interest for all of which will be deductible.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    Avatar jhwkr542 
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    Status: Physician
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    Joined: 02/15/2016

    Don’t buy a house where you’ll be unhappy.

    #214791 Reply
    Avatar Peds 
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    Status: Physician
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    Joined: 01/08/2016

    I don’t understand why you would stay where unhappy….
    It’s like….a nonstarter.

    #214796 Reply
    CordMcNally CordMcNally 
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    Joined: 01/03/2017

    Don’t buy if you’re unhappy in that city. I’m not sure what you mean by EM being volatile. You can find a job in almost any city in the country. There may be other issues in EM, but largely, finding a job isn’t one of them.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #214801 Reply
    Avatar EMDoc 
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    The market is saturated in our city and rates are dropping. Vast change in the market from 3 years ago when I moved to the area.

    #214809 Reply
    Avatar EMDoc 
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    Joined: 02/15/2016

    My husband is content here. Otherwise I would have already moved. Also they have one of the best public school districts in the area/state.

    #214812 Reply
    CordMcNally CordMcNally 
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    Joined: 01/03/2017

    My husband is content here. Otherwise I would have already moved. Also they have one of the best public school districts in the area/state.

    Click to expand…

    Content still isn’t a ringing endorsement. I recommend that you sit down with your husband and talk about the situation because it isn’t going to work long if one of you is unhappy and the other is just content.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #214821 Reply
    Avatar MSooner 
    Participant
    Status: Spouse
    Posts: 197
    Joined: 02/25/2016

    My husband is content here. Otherwise I would have already moved. Also they have one of the best public school districts in the area/state.

    Click to expand…

    Do you have kids/plan to have kids? If not, I wouldn’t worry about it. It’s nice in propping up home value, but I wouldn’t make that the reason you stay if you don’t have kids.

    If you do have kids or are planning to have them, then I would worry about it more. Private school might make buying in one of those areas less of an option. If your kids aren’t old enough for school yet, another reason to rent and see how you like the area first.

    #214823 Reply
    Liked by Tim
    Avatar wideopenspaces 
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    Status: Physician
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    Joined: 01/12/2016

    I definitely wouldn’t buy a home in suburbia in your shoes. The whole point of putting down roots is so you can stay where you are because you love it. Otherwise you’re just trapping yourself in place. I agree with others suggestion to rent in town for a year, save up a good down payment and then buy if it’s a good fit. If not, I think you and your husband need to sit down for an important conversation. But if you bought for 1M and put down a 200k down payment, you are well within the guidelines of mortgage no more than 2x household income.

    #214849 Reply
    Liked by hatton1, MaxPower
    White.Beard.Doc White.Beard.Doc 
    Participant
    Status: Physician
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    Joined: 02/06/2016

    It sounds like you are concerned that your income may go down.  I think physicians could be at some risk of lower incomes in the future if Medicare expands in a major way.  I don’t see that as likely in the near term, but who knows.

    It is wise not to overextend too much with a big mortgage for a house.  Right now the VHCOL markets in the US are undergoing a correction, San Francisco, Seattle, and other markets.  I think it may work out fine to rent, save, and take your time to figure out what you want and what you can comfortably afford.

    #214853 Reply
    Avatar antheus 
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    Status: Resident, Physician
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    Joined: 04/18/2017

    To echo other posters, you’re unhappy in the suburbs so don’t buy in the suburbs. You THINK you might be happy in the city so don’t buy in the city until you KNOW that’s where you want to be, especially with such entry costs. City living is certainly not for everyone. I pay more for less, packages get stolen off my front step, I have to search for parking every day, grocery shopping is a pain. At the same time there is no shortage of things to do. I don’t have kids so that would potentially change things, but right now it fits what we want out of life perfectly. There are tradeoffs to everything in life. You stand to lose a lot of money by buying a house in an area you don’t want to live. That goes both ways. Perhaps you move to the city and decide the ‘burbs was the lesser of two evils. Perhaps you move to the city and decide it’s great but not the place you would want to raise kids. Perhaps you move to the city and decide it’s everything you want in life, now and forever. It’s only in the latter situation that I would consider buying.

    #214863 Reply
    Avatar Gamma Knives 
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    Status: Physician
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    Joined: 06/25/2017

    Agree with advice to rent in the city to try it out and saving up. If you are both happy there then find a place. Living in the city will help you decide if you like it and should give you a better idea of exactly where you want to buy and what you want to look for in the city. It is reasonable to buy a million dollar home but you want to make sure you love it.

    #214909 Reply
    Liked by EMDoc
    Avatar MEtoNC 
    Participant
    Status: Spouse
    Posts: 23
    Joined: 06/05/2017

    Your situation is very similar to our dilemma of living in the suburbs or city.  We are renting a townhouse in the city right now and that has been a great decision.

    #214974 Reply
    Liked by EMDoc

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