Residency is in one of the most unique times of a physician’s career. While their friends will have finished up undergrad or possibly even grad school, and are most likely a few years into their careers by the time a doctor makes it to residency, physicians still have years of training left.
While their friends are buying houses and settling down, residents need to carefully evaluate their living situations before making any major financial decisions. We turned to our experts to find out how a resident or fellow should decide between renting or buying their first home.
This is perhaps the most critical factor in determining whether or not to buy. Chances are if you are a resident you may not stay in that community beyond training and could be holding that property longer than you anticipated.
Today’s rental market is expensive in many areas of the country. So many times it costs more to rent then to buy a home, have a mortgage, have property taxes and homeowners insurance. In addition, expenses like mortgage interest and homeowner’s insurance are tax deductible, drawing down just how expensive it is to buy.
While in training, any house you purchase will have to be well within your means. Most doctor loan programs are based on your expected future income, but while you are still in training your future income is still a few years away.
It might not seem too critical at the time, but location is key when buying during training. Stephanie Arcelay, a loan officer at Suntrust Bank, explains:
“It is important to be in proximity to their job. And even though some of them do not have children, yet, I would encourage them to consider goals in the communities that they’re looking to buy, because even though that’s not important to them as a buyer, it may be very important for them as a seller, at the selling point, especially when they’re looking at a short term. Always check and make sure that you are not only in love with the house, but the neighborhood as well.
If you plan on living in your area and the rental market is exorbitant, any house with prime location is worth looking into. But remember, like any major financial decision, consult your loan officer and financial advisor first in order to make sure you are ready for your first home.
Colin is the Founder & CEO of LeverageRx, an online lending and insurance marketplace for doctors. Colin has over 10 years of experience in financial services and is a licensed life and health insurance agent.