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HELOC during residency

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  • HELOC during residency

    I’m a nearly graduated resident with significant equity in my mortgage. With a recent drop in income from my spouse no longer working (new children) and increased expenses associated with the job search, board certification, licensing, etc, I’m looking at a significant budget deficit until my first attending paycheck. Even if my future job compensated me for some of those expenses, it won’t be until my first paycheck that those funds are available. Cutting non-fixed expenses will not adequately balance the budget either. I have outstanding student loans and making payments, hoping for PSLF. Deferring these wouldn’t make a significant difference as they are on the PAYE schedule. My options as I see them are to accrue credit card debt, liquidate some of my Roth IRA principle, or open a HELOC with plans to pay it off and close after the first few months of attending salary. One caveat there is that I would likely move within 1-2 years and thus be on the hook for the closing and appraisal costs of the HELOC. What are the downsides of a HELOC in this situation? Are there better options I haven’t considered?

  • #2
    How much $$ are you talking about per month?
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      yes, how much? where is your efund? are you graduating in June 2018, or next year?

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      • #4
        Efund $4000. Graduating June 2018. Total deficit about $25,000 over 8 months.

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        • #5
          Get the HELOC ASAP while you still have a job - and before someone asks when it ends. Banks don’t usually lend to people without income.

          at least it’s a backup plan!!

          ... probably worth some soul searching as to why didn’t you, or why haven’t your efforts resulted in a job starting this summer. It’ll help you for next time you go job hunting.

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          • #6
            Agree with @adventure. $25k is a lot to take out of your Roth basis but if you get really tight and have a job starting in a few weeks, you might consider the once per year option to take an IRA distribution and put it back w/i 60 days. Family loan not a possibility?
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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            • #7
              No family loan. Starting job 6-8wks after graduation pretty standard at least in my specialty. The no job is my spouse stopping work not me. So already talked to banks about it they’ll have no problem with it.

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