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Two Attending physicians, student loan debt of 660K, Buy 1st home now or delay?

Home Mortgages and Home Buying Two Attending physicians, student loan debt of 660K, Buy 1st home now or delay?

  • wideopenspaces wideopenspaces 
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    Status: Physician
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    I wish OP would chime in again. As a mom, I can’t help but worry about how much this could affect her ability to have a family and a working life that she doesn’t hate, if she doesn’t get on top of this debt. Would really like to have more of a conversation. But hopefully she’ll consider what has been said, even though it’s not what she was hoping for.

    #217704 Reply
    Liked by ITEngineer
    Avatar Dr P 
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    I also agree you should rent.  And I agree with Budgetmaestra, no need for a 2br 2ba if it’s just your fiancé the first year, then just the two of you for the next few years after that.  Put those savings into the student loans.

    Live on a very tight budget because you’ve got a lot of expenses coming up in the next few years.

    And one final thought, put all of these loans on an amortization schedule.  I bet you’ll be surprised how much will already be accounted for each month to achieve the loan repayment goals you’ve set.

    #217708 Reply
    Avatar Peds 
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    Example, this thread: 4 pages. 0 OP input.
    Mods close.

    #217849 Reply
    portlandia portlandia 
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    Earnest refinancing bonus

    From the title alone, this felt like a troll post. And with no futher comments from OP, makes you wonder.

    Maybe 4chan got tired of trolling the usual suspects?

    #217892 Reply
    Liked by Tangler, Peds
    Avatar ConfusedMD2020 
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    Status: Physician
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    Joined: 05/27/2019

    FYI: I’m the other half…i.e the fiance who wants to rent. I’m gonna respond for her because she didn’t want to to get in a back and forth and forums aren’t really her thing.

    Anyways thanks for the many responses. Yes we have a ton of debt and our # 1 priority is going to be paying that down. 5 years is probably more realistic of a time frame. We’ve also discussed things a bit more and shes definitely fine with renting for longer while we pay down debt. The location is expensive. I dont like that, but it’s close to work. And I have to commute between 2 offices. Also I can’t change that now. Atleast not this year.
    Lol she wants two bathrooms so 1b 1ba isn’t gonna happen…just no lol.

    #218001 Reply
    Avatar ConfusedMD2020 
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    Thx. I could definitely see us moving in 3-4 yrs.

    #218002 Reply
    Avatar ConfusedMD2020 
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    I think you probably already knew what the forum’s going to answer, especially if you’re a regular reader/lurker.

     

    Why would you prefer to pay a higher monthly amount (4.8K) in mortgage/interest/taxes, and be locked in a location, having to deal with the hassles of owning a house, rather than pay a smaller amount (2.5K) in rent? You will have no equity with a 0% down loan and be “throwing money away” on interest and taxes (though some of it might be deductible)

    Is the 700K in salary guaranteed, if you’re both just joining the practices?

    Click to expand…

    *Other half*

    We’re gonna be renting for sure. And yes 700k is guaranteed.

    #218003 Reply
    Avatar ConfusedMD2020 
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    Status: Physician
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    The OP posted this on the WCI Facebook page. I wish them the best, but searching for someone to agree with a plan you already decided on is risky…

    Click to expand…

    It was our first time posting and weren’t sure how many responses we would get. So I posted her question here, she posted on Facebook.

    And No, we haven’t already decided. But these responses do help.

    #218004 Reply
    Avatar ConfusedMD2020 
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    Status: Physician
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    Joined: 05/27/2019

    I think you probably already knew what the forum’s going to answer, especially if you’re a regular reader/lurker.

     

    Why would you prefer to pay a higher monthly amount (4.8K) in mortgage/interest/taxes, and be locked in a location, having to deal with the hassles of owning a house, rather than pay a smaller amount (2.5K) in rent? You will have no equity with a 0% down loan and be “throwing money away” on interest and taxes (though some of it might be deductible)

    Is the 700K in salary guaranteed, if you’re both just joining the practices?

    Click to expand…

    Lol I already knew what the responses would be like.

    #218005 Reply
    Avatar ConfusedMD2020 
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    Status: Physician
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    Joined: 05/27/2019

    Definitely rent. As said above rent is not throwing away money. Rent buys the flexibility to move and fixed housing costs.

    Hopefully both of you love your jobs but if you need to move for any reason you don’t want to be trying to sell a half million dollar house. Renting also gives you a chance to know a new city and figure out where you want to buy when the time comes. Right now I would be looking to refinance your loans and pay them off.

    For the loan payoff I don’t see it in terms of a percent paid off but time to make reasonably sure that you are secure in your practices (and marriage). Having said that I would aim for at least half of the student loan debt before you start looking.

    Click to expand…

    Other half* we’re both from the area. We’re moving back home. And yes… refinance loans and pay them down is the plan.

    #218006 Reply
    Avatar ConfusedMD2020 
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    I would definitely plan to rent for one year.  It doesn’t have to be 2 or 3 years, but it should be at least a year.  That way you have a clearer idea about marriage, the city, the jobs, etc.  After a year you will be in a much better position to understand the risks and benefits of the multitude of changes that each of you will have made over a very short period of time.

    Also, if you buy now you will likely be ready for a better house in about 3 years because the high income jobs will be stabilizing, the student loan situation will be way better, and you will have some savings.  The transaction costs eat up about 3 years of appreciation in the average market, so renting for 3 years so you can buy the long term house works out much better.

    Houses are financially similar to marriages, the longer the better for your financial health in most cases.  If you stay in a house for 20 years, the equity growth and the inflation growth with no transaction costs can contribute to the growth of your net worth.  So don’t buy now, you are going to likely change homes in short order and the market is currently at a high relative to incomes.  I see way more cost and risk with buying than with renting.  That said, it would be reasonable to rent for a year and then reassess the risks and benefits.

    We rented a fairly nice home when I became a new attending.  After one year I knew I loved my job and we weren’t going anywhere.  We bought a forever home and lived there for 22 years, having paid off the mortgage.  Our original 100k downpayment yielded 1.25 million upon sale.  It worked out well because we stayed for a very long time in a top school district and no longer had a mortgage when we sold.

    Click to expand…

    Thanks. That’s really good advice

    #218007 Reply
    Avatar ConfusedMD2020 
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    Nope nope nope. You have a staggering amount of student debt, and you have huge buy in ahead of you as well. If you could buy an apartment and pay $1,500 I’d say maybe. But not the amounts you are talking about. Between you those student loans accrue interest of something like $3,500/month. That is insane! There are many families with 2-3 kids who live just fine on your monthly interest payment alone.

    Take 2-3 years and knock out those student loans. To pay them off you are looking at putting around $20k per month toward those loans every month for three years. That’s a lot. But it is doable since you don’t have kids.

    Also, why a 2br? Get a one br since your husband will be there by himself for a year. If a 2br is $2,300/month the 1br is probably around $1,800. Then live in it together for 1-2 yrs while you finish paying off those loans. That’s easily $18k in savings in that time.

    And you still have to come up with a buy in.

    Once student loans are gone, you can buy a house with 100% financing. You can even buy the $1m house at that point if you want to. We bought the $800k house within 2 months of paying our student loans off.

    Treat the debt as a challenge and use the Dave Ramsey snowball method to pay it off. Live on a budget. Drive paid off cars. If you buckle down for 2-3 years your financial life will change forever. If you just bump along and pay $7-$8k per month on those loans it will take you 15-20 years to get rid of those loans. And kids, college savings, a house will come along in time. I promise that the $20k per month now will feel a lot less painful than paying $8k a month in six years when you have 2 kids, $36k in yearly daycare payments, a $5k mortgage and are starting to look at what college is going to cost for your little ones.

    Click to expand…

    Good advice. 2300 is legitimately the cheapest option in the area we are living. Midtown, Atlanta. I’m personally fine with a 1 br 1ba but my lady wants a 2nd bathroom . I wasn’t gonna fight that battle. What’s most important is too pay down debt and not get caught in the doctor house trap that many posters are alluding to.

    #218009 Reply
    Avatar ConfusedMD2020 
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    From the title alone, this felt like a troll post. And with no futher comments from OP, makes you wonder.

    Maybe 4chan got tired of trolling the usual suspects?

    Click to expand…

    Relax. The title is fine. Not everyone is a Russian troll 😂

    #218010 Reply
    Avatar ConfusedMD2020 
    Participant
    Status: Physician
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    Joined: 05/27/2019

    I also agree you should rent.  And I agree with Budgetmaestra, no need for a 2br 2ba if it’s just your fiancé the first year, then just the two of you for the next few years after that.  Put those savings into the student loans.

    Live on a very tight budget because you’ve got a lot of expenses coming up in the next few years.

    And one final thought, put all of these loans on an amortization schedule.  I bet you’ll be surprised how much will already be accounted for each month to achieve the loan repayment goals you’ve set.

    Click to expand…

    We will definitely be doing our best to live like residents. I’ve addressed the 2br thing above but yes. I agree

    #218011 Reply
    Avatar ConfusedMD2020 
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    Status: Physician
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    Joined: 05/27/2019

    Congratulations on the wedding and the job!

    You should know: you have made your peace with these debt numbers, because they’re part of your life, but two million (student loans + practice loans + mortgage) is super-high for all of us meeting you for the first time. That colors the previous posters’ advice.

    I would recommend renting.

    We had a no-money-down physician mortgage.  I’m glad yours worked out, but many people (including me) ignored the risk of highly leveraged real estate at their peril. If the hot Atlanta real estate market softens, you could easily be 120K upside down (10% drop in value + 10% commission/sales costs).  That’s on top of the rest of your debt.

    Your budget will show that the 700K really starts to disappear after at least 1/3 to taxes, then maxing pretax accounts, then lots and lots of debt payments.

    My gentle advice is slow down and enjoy the ride.  You don’t have to listen to the other people (or internal voice) telling you to BUY RIGHT NOW.

    I like your fiance’s approach.  Slow and steady wins a lot of races.

    Click to expand…

    Thank you! And thx for the warm advice. She appreciates it. We won’t be getting a house probably for 3 yrs…maybe more if I keep up a full court press lol. The loans + buy ins are definitely gonna take a while to pay down. Adding a mortgage just seemed a bit too risky that early on. Again thx!

    #218012 Reply
    Liked by portlandia

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