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  • First time home buyer

    Currently getting ready to finish residency, recently married to another physician with combined income of around 575k. Both of us have around 500k of federal debt but no private debt at all. Current savings around 55k (IRA, savings). I know not the best market to buy but I cannot rent again mentally and this will be one of the few things I am fairly steadfast about due to personal preference. The home we are looking to purchase is 230k which I feel is very reasonable in terms of income and could easily see ourselves live here for the next 5-10 years.

    I just wanted to get some insight into the current mortgage rates others are looking at recently in terms of physician loan rates. Currently we are looking at 30 year fixed with a 3.2% interest with no PMI and 0% down. I know this is above the national average for non-physician loans but seems that is fairly standard to account for our high debt to income ratio. I know another resident who closed with a 4% interest rate which seems horrible but I feel like the 3.2$ isnt too bad but wanted some more experienced insight.

  • #2
    Because I'm obligated to tell you because it's the right thing to do--- rent. It's a job risk situation. Also, dependent on if you've lived in the area, you may not know where you really want to live yet.

    If you're going to do it anyway. 3.2% is high but still historically low. I'm guessing you're either buying a condo, or an older home (based on the purchase price). If it's an older home, you're probably going to spend more than 230 in maintenance and updates.

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    • #3
      The difference between a 3.2% mortgage and a 4% mortgage for the home you're looking at is $1840/year. You're making $510,000/year. Worry about savings rate, debt paydown and buying/renting the right house - these are big ticket items. The interest rate on your small potential mortgage is a small ticket item.

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      • #4
        I would just like to go on record that my prediction is that you'll be looking for a different house within 5 years.

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        • #5
          You won’t be in this house in 10 years.

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          • #6
            This forum makes it seem like all physicians get an interest rate less than 3%. That’s not true. I’m at a 4.25, all the lenders told me I have a high income ratio, my wife’s lawyer would last school loans also. Together I think we have like $500,000 in loans. I’m family medicine so there you go… 3.2% is OK. If you want the house and you like it then Buy it And move on.…
            FYI, you probably already know this but I do recommend turning on every faucet during the home inspection. After we bought the house it turns out one of the showers don’t doesn’t work. :/

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            • #7
              Originally posted by Deusomega View Post
              Currently getting ready to finish residency, recently married to another physician with combined income of around 575k. Both of us have around 500k of federal debt but no private debt at all. Current savings around 55k (IRA, savings). I know not the best market to buy but I cannot rent again mentally and this will be one of the few things I am fairly steadfast about due to personal preference. The home we are looking to purchase is 230k which I feel is very reasonable in terms of income and could easily see ourselves live here for the next 5-10 years.

              I just wanted to get some insight into the current mortgage rates others are looking at recently in terms of physician loan rates. Currently we are looking at 30 year fixed with a 3.2% interest with no PMI and 0% down. I know this is above the national average for non-physician loans but seems that is fairly standard to account for our high debt to income ratio. I know another resident who closed with a 4% interest rate which seems horrible but I feel like the 3.2$ isnt too bad but wanted some more experienced insight.
              500k in debt. It is a bad idea to buy a house. Really bad idea. You have good household income. If homes in the area you live in are only 230k, then rent must be super cheap. Save yourself the hassle and don’t deal with the maintenance of a home owner. Rent. And pay these loans off in 2 years. Then figure out your needs and if you actually like your job.

              Good luck

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              • #8
                I will go against the grain here.
                3.2 isn't bad at all. My pre covid mortgage is higher than that...

                You will be fine buying the house. Try to get one that you could rent out if you decide to leave and selling price isn't profitable.

                If you are not going to rent, my advice would be to at least make a plan for fast student loan pay down first. Don't let a house deviate you from that plan....

                Sometimes numbers speak loudest. You should make a projected budget with renting and with buying. Make sure you add in $10k+ to furnish the new house and min 500$/month lowes/homedepot for home ownership that first year. Also, first year of attending is full of "ive been waiting to by X until i graduate and now i need it..." If this doesn't affect your future financial goals then who cares...



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                • #9
                  Some situations there are no reasonable renting opportunities. So buying is the 'only' way.

                  With your income, planning on buying a house that's less than 50% your salary, there's no real way to get in really big trouble. Even if you didn't like the job and had to sell in a year, the amount you would lose in the grand scheme of things is relatively small.

                  So yes, your rate is fine historically and buy your cheap house. Is it cheap because you're LCOL or is it a fixer upper? The 2 make a huge difference going forward in calculating costs.

                  Everyone's different in what they want, but I'd also bet on you not being happy with the house in 10 years. 5 years is probably more reasonable.

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                  • #10
                    Originally posted by Deusomega View Post
                    I know not the best market to buy but I cannot rent again mentally and this will be one of the few things I am fairly steadfast about due to personal preference.
                    your purchase price is reasonable and you will almost certainly be fine.

                    however the above statement is intensely irrational and these kinds of beliefs can damage you long term. i say this out of love/concern not trying to be a jerk, the web is hard for tone.

                    people do this all the time, carve out little areas of irrationality
                    -i deserve a new car
                    -we love the lake and therefore a boat just makes sense
                    -i am going to enjoy money now and focus on retirement savings later

                    just be careful, you can afford one little irrational belief/stance but when it comes to PF you can't afford seven.

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                    • #11

                      Originally posted by MPMD View Post

                      your purchase price is reasonable and you will almost certainly be fine.

                      however the above statement is intensely irrational and these kinds of beliefs can damage you long term. i say this out of love/concern not trying to be a jerk, the web is hard for tone.

                      people do this all the time, carve out little areas of irrationality
                      -i deserve a new car
                      -we love the lake and therefore a boat just makes sense
                      -i am going to enjoy money now and focus on retirement savings later

                      just be careful, you can afford one little irrational belief/stance but when it comes to PF you can't afford seven.
                      The statement was a bit melodramatic but I am not a spendthrift. My parents both make less than 50k combined and have instilled in me what I would consider fairly frugal behaviors. During residency I made around 55k per year and will come out of residency with my roth IRAs maxed every year and then some with savings of around 30-35% of my gross income yearly while on a residency salary. My wife is close to the same in terms of upbringing and savings rate. Sure this is not mind blowing savings and may be even considered mediocre in terms of the numbers I've seen on this forum but I feel overall I did fairly well in terms of loans and savings while in residency. I know several others with much larger loans and with a wife or husband who does not earn income at all. While others went on vacations I did not, etc. I am still driving a Honda which is 14 years old at this point and plan to continue driving it until my contract renewal in 3 years.

                      I do not believe it is irrational to choose home ownership as a sticking point in my case because for me personally I cannot imagine living the next 5-10 years in an apartment with some noisy irrational neighbor above beside or below me and sharing walls with college students or others who are still finding themselves. Also people FAR overestimate the availability of decent rental options in small-mid sized towns. I spent around 2 months prior to buying searching for a decent rental option and in a 40 mile radius of my work location I found 2-3 houses for rent in that amount of time (likely because everyone is selling due to the inflated prices) and these had rent ranging between 2.5-4k per month which in my mind seems ridiculous when I could own for less and in some cases far less. Sure there are always plenty of low priced jam packed rental communities renting out to college students and middle income earners but I'd like to skip 2 AM parties, dogs barking, domestic abuse, etc.

                      I live a fairly minimalistic lifestyle as it is and am not into cars, boats, trucks, statues, pools, beach resorts or any of these things. I enjoy the outdoors but again this is practically free and working out and have had my weight set, rack, etc for sometime and this lasts forever. I "splurge" a bit on steaks every once in a while. I expected most of the responses I've seen but overall I feel house ownership is a bit villainized on this forum and understandably for good reasons when some fresh attendings spend 2-3x their gross income on mortgages. I feel .5x our gross income is overwhelmingly conservative and prudent and the mortgage will be less than the rent we are currently paying by a decent chunk.

                      I am totally with you though in terms of deferred pleasure through college and med school and residency and how some people suddenly try to make up all of that by outspending themselves into oblivion.

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                      • #12
                        In regard to your questions about rates, that's pretty decent given the circumstances. With a better financial picture 3 years ago when we bought, our rate was at 4.75%. We were able to refinance this year to 2.125% and have locked that in.

                        I think your above post at least acknowledges that you are aware of the situation. Paying off your debt ASAP needs to be a priority.

                        My only concern about buying the house is whether or not you hate your job and how you'll feel later. I thought I would "love" my first job and didn't. Luckily, we rented at that time. I won't pretend I didn't go against the grain, as we did buy a house in residency. We got lucky with a good market and ended up profiting, but the stress of selling was there. Sure enough had we held onto it longer, we could've made a lot more profit (with the added hassle of being landlords long-distance). To be honest, had we still been living where I went to residency, we absolutely would have stayed in that house longer. We LOVED it! Our rate at that time (with an FHA loan) was around 3.25% I think.

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                        • #13
                          Originally posted by Deusomega View Post
                          I expected most of the responses I've seen but overall I feel house ownership is a bit villainized on this forum and understandably for good reasons when some fresh attendings spend 2-3x their gross income on mortgages. I feel .5x our gross income is overwhelmingly conservative and prudent and the mortgage will be less than the rent we are currently paying by a decent chunk.
                          Home ownership is villainized in certain situations where buying a house isn't the smart financial move. Whether due to self selection or some other reason, almost all of the 'Should I Buy A Home' posts are people who probably shouldn't buy a home at that particular point. Some people would probably say spending is villainized here, however, I guarantee that many of the regulars here spend a lot of money on certain things but they can afford to do so and they know it. You probably know this but comparing a mortgage vs. rent is a very narrow way of looking at it. Best of luck.

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                          • #14
                            WCI did not exist in 1999 so we blasted through all the red lights. We bought right when my wife finished residency and got hired. 200k in loans. 240k combined for the two of us. Looked at the three model homes, picked the largest we could buy. 434k. Scrounged up 5% for a down payment. Borrowed 80% at 8% 30 year/fix and 15% equity loan at 10%(interest only). I remember the loan officer giving us a sympathy/"are you sure you want to do this" query, cause it was obvious we had no clue what we were doing. The two sales officers looked at us like they were shooting fish in a barrel. No regrets. Guess we were lucky. Cosmically if you're posting on this board and the rationale is reasonating with you, you've won the lottery.

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                            • #15
                              If the market keeps appreciating and your jobs both work out, buying the house will turn out to be a reasonable decision. And it sounds like you strongly want to be a homeowner. If you understand the downsides and can live with those downsides, then you have done your due diligence and should pull the trigger with confidence.

                              And 3.2% is a reasonably good mortgage rate. Not amazing, but very good and very affordable given the home price.

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