Buying a house and attending school

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I have been accepted to school, and was in the town I will be living. My wife and I were looking at houses to rent, and decided we would rather buy a house, considering rent and a mortgage are the same cost. Besides, to me it only makes sense to come out with something instead of throwing that money away. My wife will be the main source of income for us, along with the Montgomery GI Bill and of course loans. Has anyone done this? Is it a good idea or a bad idea? The way I see it, I will have this cost one way or another. Will having a mortgage affect my ability to get student loans? I have known several residents that buy houses while attending medical school, and having very little income except student loans. Any information or advice will be much appreciated.

Just wanted to click in here and warn that and investment is an investment and can turn out either way. I am quite conservative in regards of investing and unless your wife's salary covers the mortgage expenses I would advise against getting involved in buying a house if it means you are paying off borrowed money (mortgage) with borrowed money (student loans). I know that the Fort Worth area has been growing quite nicely in the past but with a rising interest rate environment appreciation in the 10-20 percent range seems unlikely to me just about anywhere in the country. As far as the preconstruction/ new communities I believe they might be nice as an "investment" but since you are looking at finding a place to stay while you are in school this might again not the greatest of options. I think that there should always be something cheaper to rent than the total cost of homeownership will run you. So please make sure that you understand the difference between renting, owning and investing. I can tell you that you do not want to create more stress for yourself while in CRNA school than you absolutely have to.

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You can get a Stafford loan regardless of income and credit status, for $18,500 per academic year. Depending upon your school's tuition, this may be enough to cover over the cost of going to school. Since my school is expensive (USC) and I have a hefty mortgage each month, I plan on taking out the max Stafford loan amount, plus extra from Key Bank. I heard on my interview day that Key Bank and other private sources will loan an extra $30,000 per year for living expenses, etc. This is the only way I could go to CRNA school! My husband is still freaking out quite a bit about future house payments.... The director of the program at my school told us not to panic about money, that everything will fall into place. There is always money out there! Good luck to you!

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Specializes in Postpartum.
Just wanted to click in here and warn that and investment is an investment and can turn out either way. I am quite conservative in regards of investing and unless your wife's salary covers the mortgage expenses I would advise against getting involved in buying a house if it means you are paying off borrowed money (mortgage) with borrowed money (student loans). I know that the Fort Worth area has been growing quite nicely in the past but with a rising interest rate environment appreciation in the 10-20 percent range seems unlikely to me just about anywhere in the country. As far as the preconstruction/ new communities I believe they might be nice as an "investment" but since you are looking at finding a place to stay while you are in school this might again not the greatest of options. I think that there should always be something cheaper to rent than the total cost of homeownership will run you. So please make sure that you understand the difference between renting, owning and investing. I can tell you that you do not want to create more stress for yourself while in CRNA school than you absolutely have to.

I'm pretty conservative when it comes to investments too- but a house is more than an investment- it's where you live. You will pay something to live somewhere, you know? So, in the worst case scenario where your house/condo depreciates by, say 10k over 3 years (totally not likely) you still would have less of a loss than when you compare that to renting for two years. Say rent is 1000/mo for three years- that's 36,000 you will never get back- so call that a 36K "loss". Or say you pay a mortgage for the same amount for three years and sell your house condo at a 10K loss. You will have built up around 5K in equity over th three years so you are really only losing 5K. So if your house/condo stays flat (doesn't depreciate) or gains value it's all gravy at that point.

It *rarely* makes more sense to rent than to buy, imho. But of course YMMV.

-Jess

PS- I totally agree though- don't do it if you have to borrow to make the monthly payments. Paying a loan with another loan complicates the situation and doesn't really make sense unless you plan on staying in that home for longer than the three years you are in school. And maybe not even then depending on your combined income after school.

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Your numbers make no sense to me.

You rent for $1000/month x 36 months=$36,000 (loss)

You buy and pay $1000/month (P&I) x 36 months=$36,000(invested?)

You sell such house, say dead even $. On top of that you pay a realtor 6% which would be $9000 on a $150K house, plus at least $1k closing costs. So you are coughing up $10k to sell on top of that same $36K that the renter just spent living somewhere for three years. Did I mention maintenance costs for homeowners?

All you really have to show for it is the tax advantage--which is usually overshadowed by property taxes and higher insurance costs for homeowners that for renters.

If you relocate after school, you may not sell immediately. If you can't rent, than you can really be up a creek. The house either gets "market worn" or you have a renter that may mess up you house.

If you don't relocate and start making the big buck$, the house may not meet your "new" standards. Then you are still in a "selling my house" situation.

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Specializes in Postpartum.
Your numbers make no sense to me.

You rent for $1000/month x 36 months=$36,000 (loss)

You buy and pay $1000/month (P&I) x 36 months=$36,000(invested?)

You sell such house, say dead even $. On top of that you pay a realtor 6% which would be $9000 on a $150K house, plus at least $1k closing costs. So you are coughing up $10k to sell on top of that same $36K that the renter just spent living somewhere for three years. Did I mention maintenance costs for homeowners?

All you really have to show for it is the tax advantage--which is usually overshadowed by property taxes and higher insurance costs for homeowners that for renters.

If you relocate after school, you may not sell immediately. If you can't rent, than you can really be up a creek. The house either gets "market worn" or you have a renter that may mess up you house.

If you don't relocate and start making the big buck$, the house may not meet your "new" standards. Then you are still in a "selling my house" situation.

Maintenace costs are a good point. We lived in fear the first year in our home that our boiler would crap out and we were too cash-poor to fix it. :uhoh3: You can get around that somewhat by a condo- but then you are paying for it somewhat anyway with condo fees. But not everyone uses a realtor- we didn't. With the internet it is a lot easier nowadays to sell your house (or buy) without one. And I believe you can write off closing costs from your tax bill too.

All in all though- I think it comes down to how likely the house is to hold its value or appreiciate. I agree- I wouldn't want to take on the liablity of a probable loss. But if it holds it's value I don't really see the downside to buying. In the scenario you suggest above- you aren't taking into account the (approx) 5K that you would have built up in equity after 3 yrs. So it would really be more like a 5k loss. And you'd probably have lived in a nicer place than you could have rented- so it could be worth it.

To OP- you could take a look at what properties have sold for in the area you want to buy in for the past few years to see what the appreciation rate looks like. Granted, it's not guaranteed to continue at that rate- but it gives you some history to judge whether properies are currently over-valued.

Good luck deciding which way to go!

Jess

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Actually, when I said that you sold it for dead even I was saying that your equity went "poof"--up in smoke!

I just sold my house here in San Antonio--a nasty "buyer's market."

My realtor's wife took some pictures, went home and loaded them on the MLS, and I had my buyer 8 hours later. I made $4200 on the deal. I spent $117K on the house 3 1/2 years ago, owed $112,800, sold for something like $132K The difference in these two numbers went to wherever money seems to go in these deals. But out of the $4200 that I made, I spent $2500 on shingles (a good deal--labor is cheap here), $400 on a nice sink/faucet set (self-installed), $600 or so on fence replacement (again, mostly self done), and other things that make my net gain around zero. I am expecting around $2000 back from my escrow account, but that is just my money that someone else has been earning interest on.

As far as selling it yourself, the amount of houses that sell by owner represent a total of 5% of the market. You mentioned using the internet. To get a MLS number or a listing on realtor.com, you'll need a realtor. My buyer came from Illinois and made an offer sight unseen from the pictures his "buyer's agent" sent him (his brother lives in my neighborhood)...you can't touch these customers with a sign in the yard. Did my realtor do a lot for me?

No, he loaned his power washer to me, took some pictures, helped with paperwork. I paid him $6000+ for this.

I have a friend (in the same neighborhood) that has had her house vacant since last July when she moved to Houston to go to NP school. They have dropped their price $15K, plus had to make payments on an empty house for 9 months (and are still going to have realtor's fees if it ever sells). That is the nightmare that I wish none of you have to experience.

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Dave

I'm with you on this one, Jess's numbers didn't add up to me either. Seems like that even if she sold for neither a profit or loss she would not be able to cover for her closing cost. DSAC if you are a first time home buyer please don't discount all the other cost associated with the purchase of a house if you have been through the process before I am sure you can run the numbers yourself. I would figure that in Ft Worth in newer constructions you'll also be looking at Association Fees and limitations trough associations in regard of eventually renting/ selling the place in the future. Also the building of multiple new communities in the area could be a double edged sword....while I think that in a up market that can add value to existing homes it could quite easily do the opposite in a down market when there are just to many new houses out there and prices get depressed....this happend in Los Angeles before (big time I think in the late 80's) and it took people 10 plus years to recover from the equity losses they had.

Just food for thought....I am not trying to dicourage you here but just shed some light. My wife and I were in the same situation and actually bought a townhouse here in S. FL about two months before she started her program. The market here has since appreciated significantly and I am hoping to walk away with some money...would I do it again....maybe, maybe not....the process was tedious the costs more than anticipated (we were 1st timers) and even the running costs are higher than thought, thanks to rising association (insurance-due to hurricanes) fees...etc....etc....Fortunately my salary covers our running expenses...but I believe we could have rented a lot cheaper and possibly nicer with a lot less headaches.

You want to make sure that everything adds up up front and also give yourself some room just in case something doesn't work out 100% the way you planned it.

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Hello again... My husband and I bought our house in San Diego county in February of last year. I know that our area of the country is a little INSANE in the housing market right now, but we are projected to make a lot on the purchase. We refinanced six months to the day after we bought the house, and our appraisal value had gone up $56,000. Six months! It has been so, so hard to make our mortgage payments, though. It's a big tradeoff for us. We're "house poor" right now, but in the long run it's a great investment. Our real estate agent told us that houses appreciate (on average in the US over the past 20 years) six percent each year. So no matter where you live, I doubt it would depreciate. Also, we didn't have the money to put any down, and we included closing costs in our loan. That helped us a lot. If you can, try to look up statistics on the area in which you are purchasing a home. You can probably get a general idea about home appreciation. It sounds great that this is going to be a newer community....

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I too would like to get into a house before I start school, but I am afraid of hidden costs (first timers) and homeowner responsibility. My husband is adamant about getting out of our apartment. He would like to purchase a townhome with the intent to turn around and rent it out once I finish with school. We won't be relocating as his job is client-based and there are two schools to apply to here in Houston. So, I want the home, but get anxious about stressing over the house once we're in it. If all goes well, I will be starting next year. Any thoughts? :uhoh21:

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I'm in an apartment during the transition since we sold our house. When I move in two weeks, I would rather sleep in my car than rent another apartment.

We are probably going to rent a house because we most likely will move after school, otherwise we would have looked to buy (it took a lot of weighing to get to the rent decision). It sounds scary to use student loan $$ to pay a mortgage, but that same money would be paying your landlord's mortgage.

Good Luck!

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That all depends where he lives. Two to three years where i live is a lot of money seeing our home prices are going up about 15 percent per year, and that's conservative.

True, but that's with lower interest rates. If mortgage rates go up (and a lot of people think they will) 15 percent or more annual gains probably won't happen in 2-3 years. The higher prices are largely driven by lower interest rates.

In many markets the prices are still high, but the number of houses that are actually selling is dropping off. Some people think it's the beginning of the end of the housing boom.

If you're planning on living in the house for a long time then it probably doesn't matter. But if you're planning to sell in 2-3 years you could get caught in a negative equity situation.

:coollook:

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My husband is adamant about getting out of our apartment. He would like to purchase a townhome with the intent to turn around and rent it out once I finish with school.

Have you ever dealt with tenants? It's a lot more work than you might think. You'll go for months without having to do anything and just collect the money, which is the fun part. But then everything goes wrong and a ton of stuff needs to be fixed that you have to take of ... not so fun.

Then there's the occassional nightmare tenant ... despite all of your efforts to screen applicants with credit checks, etc ... who doesn't pay the rent and wrecks the house ... try getting them out of there. Meanwhile, you still have to pay the mortgage so you really need a six month surplus of mortgage payments to cover yourself for deadbeat tenants.

I do know people who have done well with rental properties (although they were willing to put up with the hassles), but personally I'd never do it again. You can hire a real estate firm to manage the property but it can be expensive.

:coollook:

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