Buying a House

[Superhuntress]

I am looking for people who have actually been successful buying a house during dental school! Has anyone who bought a house rather than renting during dental school willing to offer advice? I want to buy a house, but I am wondering how the home loan thing works as a dental student since we are students, meaning unemployed. I am not married, so I do not have a spouses income to go off of either. So how does the loan firm handle this situation? Can mortgage loans be made off of finanical aid letters? Is it even possible to get a home loan as a dental student? I have my financial aid award letter, and a private student loan, so I know I will have the money to pay the mortgage. Thanks.

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[jorUW]

I'm an entering D1 who just got pre-qualified to buy a home and will hopefully be putting an offer down soon. I had good enough credit (700+) that I was able to be pre-aproved paperless (meaning I didn't have to show income, collateral, etc...)

It worked out best to go in and talk with a professional before I spent time looking for a house. The woman I worked with was very kind and walked me through the whole thing. I gave her my financial aide budget, but she seemed more concerned with paystubs and tax returns at the time. Later, when she ran the credit report she said that none if it would matter b/c of my score. She said they would have found a program that would work for me regardless, but I wouldn't have gotten as good of an APR. Good luck!

 

[Superhuntress]

Thanks for your reply. Did you go through a local bank or a lending agency to get pre-qualified? My credit is also 700+, so hopefully I will be as lucky as you are to be pre-qualified! I don't have a local bank I am familiar with in the area where I am looking for houses, so would it be better to go to a lending agency or an unfamilar bank? Congratulations, you should be very proud to have qualified to buy a house!

 

[openwyd22]

Understand that a no-document loan will also force you to pay a higher interest rate, even with a solid credit score above 700. Also, be aware of any PMI (private mortgage insurance) that will become another expense if you cannot make the 20% down payment.

Having mentioned that, I would strongly encourage buying a home while in school. Just be sure not to spread yourself too thin to where you may need to find a job during school to pay the mortgage. Even that though can be done. Good luck

 

[The Wop]

I see that you're going to Detroit Mercy next fall, as am I. I'm from the Detroit area and I'm curious as to where you want to buy a house. I'm also in the market, but I haven't started looking just yet.

 

[billermo]

Understand that a no-document loan will also force you to pay a higher interest rate, even with a solid credit score above 700. Also, be aware of any PMI (private mortgage insurance) that will become another expense if you cannot make the 20% down payment.

Having mentioned that, I would strongly encourage buying a home while in school. Just be sure not to spread yourself too thin to where you may need to find a job during school to pay the mortgage. Even that though can be done. Good luck

All good points that people tend to forget. Also figure closing costs, property taxes, insurance, maintainence, realtor fees when selling, opportunity cost on your down payment, etc. It all adds up. So unless you are in a good market, you may be better off renting. As full time students, we won't see the tax benefits of ownership unless you have a spouse that works. You need to do the calculations. I bought based on 5% home appreciation in my area, but my property taxes (1% of value) are dirt cheap compared to other cities. I should break even with renting after I sell. It should cost me around $30,000 to own my house over 4 years. That's equivalent to a $625 monthly rent.

If the market takes a dump in 3 years, I'm screwed. It will cost me more to own than rent. On the otherhand, if the market does well, I could make more. It's a gamble. The days of 20% appreciate rates are over. Don't assume ownership is the best option. It depends on your circumstances, length of ownership, etc.

Best advice is to get a roommate to help pay your mortgage!

 

[pmantz]

I just bought a sold/bought a home and know(my experience) how difficult/stressful home buying and selling can be. It is very expensive and there are so many unexpected costs that pop up. Buying a home made sense for me and my family. I needed three bedrooms for my 3 kids and also a place for me to study, buying was the most cost effective option for me. If I didn't have 15% for a down payment it wouldn't have been. If was just me and my wife we would have just rented a small apartment close to school. Owning a home is a huge responsibility, maintenance can be expensive and time consuming. And like the previous poster stated, if the market sucks when you want to sell you could lose money, or have to stay in your home because you don't have enough equity .

 

[Superhuntress]

Yay! I got approved for a mortgage! Thanks for all of your help and advice everyone!

 

[pmantz]

Yay! I got approved for a mortgage! Thanks for all of your help and advice everyone!

cool, where are you buying a home? I used to live near D town.

 

[HOTTY]

I just bought my first home. Seller paid all closing costs, all maintenance is under a $200/year home warranty with a $75 deductible. Renewable each year.

There is no way that renting a $900-$1000 place would be a better financial decision than buying. (I would waste $48,000 over four years!) That is a third of the value of the home. Even if I lose $1-$47,999, I come out ahead!

Hooray to all those who buy!

 

[DrJeff]

I was just making a repair on my guest bath toilet when I thought of everyone here in the forum who have expressed interest in purchasing a house.

Not to try to talk anyone from purchasing a house, but there are things you need to think about when purchasing it. A lot of first time buyers only look at the cost of the mortgage, taxes and utilities to see if they can afford the house. There are a lot of hidden costs due to regular maintenance - that IS NOT covered by the $200-500/yr home warranty. The warranty mentioned by Hotty really only covers the cost of repairing or replacing a house's systems - hot water heater, A/C, dishwasher, etc. Costs of yearly maintainance of the A/C is yours. The cost of cleaning the carpets so you can extend the life of them. Cost of A/C air filters. Cost of roof repairs. Cost of repairnig plumbing leaks. Cost of purchasing tools to fix things in a house. Cost of tools and equipment for maintaining the landscape. Cost of furnishing the house. Cost of decorating the house. I could go on and on with additional costs that a person who owns has to consider and come up with the funds when they OWN a house. In addition to the financial costs comes the cost of your time! In order to keep the house from falling apart, you have to dedicate your precious time each week to maintenance.

These are just a few things to consider before you jump on to the bandwagon and buy a house. I would hate for you to buy a house and realize that you don't have the money to cover all costs. In the end, if you don't take care of the house, you could lose a lot of money on a house if you live in areas where the housing market is not strong.

Ohh so true!

renting = no big deal about the maintenance, just a quick vacuum/clean the bathroom before anyone of importance comes over and call the maintenance folks(who have a key to your place) when problems arise.

Owning = you're fairly regularly(especially if your looking at selling it in 4 years) concerned about its market value, upkeep, local taxes, etc. Maintence often involes finding the appropriate service technician who them will tell you what time they'll be there and you have to accomodate their schedule if you want it fixed in a relatively quick amount of time.

Owning does have equity advantges over renting(as long as the market appreciates), but if someone had bought say 2 years ago now at the peak of the market, if their lucky, they'll be able to sell in a few years and break even, more likely a slight loss situation depending on the market. Thats the beauty of real estate, the risk factor

 

[DrJeff]

this is not my first house. I have all the tools already. I am a non-traditional student with accumulated housegoods.

Gas powered yard tools One of my absolute favorite "my time" jobs to do, and why I don't think I'll ver be able to get a yard service to take care of things. I just enjoy way too much sitting on the yard tractor (cup holder equipped of course) riding around the yard, and even cleaning up the planting beds around the house. I'm now proudly up 7 gas powered yard tools totaling 46hp to keep my yard looking the way I want it too

I'm still waiting for them to develop a 10hp gas powered high speed hand piece! Now that would be a blast to use

 

[pmantz]

Ad, if any of you personally believe in or even know Murphy, then you know his laws come into effect at the most inoportune times. This year I had a roof leak and a water pipe leak (at different times) that happened during major test weeks. In both situations, you have to put yur studies aside and address the issues. The great issues of ownign a house.

I know his laws all too well, I just sold my first home last month, and in addition to moving costs and the few repairs I had to make for my home inspection. My sewar backed up one day before closing. And the first weak in our new home, the sewar backs up. This time it cost twice as much to fix. Money I was going to use to get a new smoker, and some new perrenials, went down the drain.

One of my favorite problems I had was last year, the weakend before finals my daugther clogged the toilet, and then it flooded the bathroom upstairs which then seeped into the walls and over the carpets downstairs, damaging plaster on the ceiling and even over my pool table in the basement. (I wasn't home when this happend otherwise I would have arrested the situation before it got that bad.) I was taking 19 credits of primarily science and math and I am lucky I had insurance and understanding teachers. I then spent the summer forgoing research, and repairing everything. Owning a home is a huge hassel sometimes, but is very rewarding as well. If you don't have to buy don't, I just know in the next four years I will have numerous things break around when I need to study for exams.

 

[dddsmack]

Don't buy a house if you are a puss and can't handle mowing a lawn or fixing a toilet. You won't succeed.

If you are a real man, or women Hotty, go for it. Sure furnishing a home can be expensive, but these are lame excuses for people to throw out there because they aren't daring enough to throw there dink on the table and take a risk.

Buying a house is a great investment oppurtunity, if you are up for it, if not, keep making someone else rich and shut up.

 

[JavadiCavity]

Don't buy a house if you are a puss and can't handle mowing a lawn or fixing a toilet. You won't succeed.

If you are a real man, or women Hotty, go for it. Sure furnishing a home can be expensive, but these are lame excuses for people to throw out there because they aren't daring enough to throw there dink on the table and take a risk.

Buying a house is a great investment oppurtunity, if you are up for it, if not, keep making someone else rich and shut up.

Please refrain from being vulgar. Your post didn't add anything to the discussion. Thanks!

 

[JavadiCavity]

Personally, I'm think buying a house is a bad idea during school. Furthermore, given the current climate of the real estate market, I'm not certain you'll make a resonable ROI over 3 to 4 years. Your better off saving the difference between rent and your anticpated mortgage payement in a diversified portfolio. Buying a house/condo seems mature and glamorous, but it's, in my opinion, putting the cart before the horse. My experience with home ownership convinced me to rent during school. And, after graduation, I plan on renting for a couple of years until I'm happy with the practice I purchase and it's location.

 

[dddsmack]

.

 

[Cold Front]

Understand that a no-document loan will also force you to pay a higher interest rate, even with a solid credit score above 700.

The real estate market is in a bad shape now, it's a buyers market. A 700+ score will get you a prime-rate interest loan instantly, but it's not the best interest rate (you need 760+ for those). So it's the borrower's FICO score that ultimatly determines the interest bracket their loan will work with.

Just because you have a score of 700 with one of the credit bureaus doesn't mean the lender will use that score, they usually work with the middle score (throw-away the highest and lowest).

It's a great time to buy a house/condo.

 

[TexDDS]

How did you guys come up with a down payment for a house? Would it be advisable to use student loan money as a down payment or is this playing with fire? I am moving to San Antonio in less than a week. My wife and I will rent for the first year to get a feel for the area and may be looking to buy sometime next summer. Thanks for any advice.

 

[Ex_EE]

You can do what is called an 80/20 loan and not have to put anything down. Basically you take out two loans. Your primary loan is 80% of the price. The second loan is a home equity loan of 20% of the price. This is better than paying PMI because at least the money is going towards the house.

 

[Superhuntress]

I used savings and my student loans for my down payment. My student loan interest rate is lower than my mortgage interest rate of 6.5%, so I used one loan to pay another basically.

 

[Cold Front]

My student loan interest rate is lower than my mortgage interest rate of 6.5%, so I used one loan to pay another basically.

How did you get your student loan below 6.5%? Stafford loans are 6.8%, while private loans are 7% and higher.

 

[Superhuntress]

How did you get your student loan below 6.5%? Stafford loans are 6.8%, while private loans are 7% and higher.

I went through a private lender who offers Stafford Loans at 5.8%, and I used a cosigner for private loan so it is a lower percentage rate as well.

 

[johntara04]

I used savings and my student loans for my down payment. My student loan interest rate is lower than my mortgage interest rate of 6.5%, so I used one loan to pay another basically.

I don't know if I am being dumb here, it is that last day of finals and my brain is fried, but by paying your home loan with student loans, aren't you paying a lot MORE interest? I am thinking that you are paying the 6.5% on the house every month with your house payment, and then on top of that you are paying your student loan interest rate. Something to consider when buying a house.

 

[pmantz]

I had about 15% down(but the mortgage is in my wifes name), I will be using some of my loans for the monthly payment, but I would be using that to pay rent otherwise.

 

[DrJeff]

One other factor just to throw in the mix is the "what am i going to do with it in 4 years" factor.

If you plan on living around the area where you're going to goto d-school, then not such a big deal in buying a house. If you plan on living in a different area, then in 4 years, you'll be looking at the stresses of finishing up dental school, on top of the stresses of trying to sell your property. If it doesn't sell and you have to move onto a different city for a job/residency then you may very well be looking a 2 mortgages(plus student loan repayments) or if you choose to rent/lease it to someone, then you get to be a landlord from a different city all the while trying to sell the place.

4 years is a long time from now, and who knows the real estate market may be real hot again by then and selling could be easy, or it may be as it is now and/or worse and selling could be a beast.

Once again, it gets down to how comfortble you are with the concept of risk of ownership, since it does have some advantanges financially, but it also has some risks too. This is the conversation that you and your spouse(if applicable) need to have to see which path your most comfortable with

 

[pauljeekim]

so, i have a question about buying a home...

i'm going to usc this fall, and i'll probably be getting a 3bd somewhere, b/c of family.

assuming that i pay around 2200/mo for rent. how much of a loan can i get for a similar payment. or, what do you think would be a decent amount to take out in loans, after factoring in maintenance and taxes, etc. ?

thanks in advance for any replies.

paul.

 

[pmantz]

so, i have a question about buying a home...

i'm going to usc this fall, and i'll probably be getting a 3bd somewhere, b/c of family.

assuming that i pay around 2200/mo for rent. how much of a loan can i get for a similar payment. or, what do you think would be a decent amount to take out in loans, after factoring in maintenance and taxes, etc. ?

thanks in advance for any replies.

paul.

Depends on your credit and % of loan to down payment. More down payment, lower interest and lower payment. I am sure there if you contact a mortgage broker(which you should do before you even contact a Realtor) they can tell you what you can afford. I know there are functions and programs which can do it for you on realtor.com.

My wife got the mortgage on our current house(I have to much debt to on it), and we borrowed 175ish with 15% down, our current payment is around 1550. If that gives you an idea, but we have a 3bdr in Milwaukee, which is way cheaper then a decent 3bdr in SC. Good luck. Paul

 

[jim85213]

How did you guys come up with a down payment for a house? Would it be advisable to use student loan money as a down payment or is this playing with fire? I am moving to San Antonio in less than a week. My wife and I will rent for the first year to get a feel for the area and may be looking to buy sometime next summer. Thanks for any advice.

Try TruWest Credit Union. They are in Texas and Arizona. I just got my mortgage through them at 100% financing. Their underwriter doesn't do 80/20 loans anymore so eventhough I didn't have to come up with a down payment, I still have to pay PMI. I bought my rate down, using closing costs the seller alotted in the contract, to 5.75%. I am in AZ though so I'm not sure if the rates depend on location but I do know that TruWest is in Texas. You can apply online, that's what I did. Give it a shot.