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Here's my dilemma:
1. I paid into the Montgomery GI bill to the tune of $1800.00, so I am entitled to $1789.00 monthly to be deposited directly into my checking account for a total of 36 months, then another 12 months of income from the post 9/11 GI bill all for living expenses while enrolled in post graduate training. This equates to at least $64,404.00.
2. As a Veteran, I qualify for a VA loan with no down payment, and the rates are around 3.6-3.75% at the moment. My credit score is very good because I've continued to pay on student loans for the duration of my AD service.
3. I am looking at homes in my residency area that cost between 90-100k, and the monthly payment for one of these homes with a 15 year mortgage will be around $800.00.
4. I am very tempted to buy an inexpensive home and make monthly payments from my 52k resident's salary (4300/mo before taxes, etc), then pay $1789 directly to the principle on the mortgage each month, thus building equity in the home quickly.
Admittedly, this approach is in direct opposition to the 20% down payment rule, even though I can afford a 15 year mortgage. Additionally, I will be moving to a relatively small town and I'm not certain that I'd be able to turn around and sell a home quickly once we're done with residency, and I plan to continue on to a fellowship. We could feasibly convert the home to a rental property, especially since the hospital has three new residency programs, and I may be able to rent to incoming residents or even college students at the local university. I just don't feel comfortable about not having a down payment. We've also considered renting, but rental costs are going to be higher (around $1200/mo) and I also don't like the idea of the GI bill payment going into another person's pocket when it could be used to generate equity. If you were in this situation, what would you do?
I am currently facing the decision to purchase a house while in residency. I am leaving the military after four years as a GMO and entering a residency in a PGY-2 slot. I was foolish enough to not save enough cash for a down payment on a home loan, and I realize that now. However-
1. I paid into the Montgomery GI bill to the tune of $1800.00, so I am entitled to $1789.00 monthly to be deposited directly into my checking account for a total of 36 months, then another 12 months of income from the post 9/11 GI bill all for living expenses while enrolled in post graduate training. This equates to at least $64,404.00.
2. As a Veteran, I qualify for a VA loan with no down payment, and the rates are around 3.6-3.75% at the moment. My credit score is very good because I've continued to pay on student loans for the duration of my AD service.
3. I am looking at homes in my residency area that cost between 90-100k, and the monthly payment for one of these homes with a 15 year mortgage will be around $800.00.
4. I am very tempted to buy an inexpensive home and make monthly payments from my 52k resident's salary (4300/mo before taxes, etc), then pay $1789 directly to the principle on the mortgage each month, thus building equity in the home quickly.
Admittedly, this approach is in direct opposition to the 20% down payment rule, even though I can afford a 15 year mortgage. Additionally, I will be moving to a relatively small town and I'm not certain that I'd be able to turn around and sell a home quickly once we're done with residency, and I plan to continue on to a fellowship. We could feasibly convert the home to a rental property, especially since the hospital has three new residency programs, and I may be able to rent to incoming residents or even college students at the local university. I just don't feel comfortable about not having a down payment. We've also considered renting, but rental costs are going to be higher (around $1200/mo) and I also don't like the idea of the GI bill payment going into another person's pocket when it could be used to generate equity. If you were in this situation, what would you do?
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