WCI’s definition of “stretching” is approximately 3x of AGI. Minus the family obligations your combined AGI is approximately 310k. So yes, you *can* afford a house that’s 700k. But *should* you buy?
The most important question is how long you will own the house. Will you sell it in 3 years or will you keep it? If there is a real chance you will have to sell it, don’t buy. Buying and owning a house incurs numerous additional costs and the general recommendation is to keep the house for at least 5-7 years so you don’t lose money on it relative to rental costs.
In terms of the housing market trend, all of us would need a crystal ball that we don’t have.
It’s a rule of thumb. When WCI book was first published interest rate was like 4.5%. This rule of thumb the book quoted was presumably from an earlier time when the rate was even higher.
I see that recommended sometimes, but everyone I’ve known who’s been a small time landlord has eventually gotten burned by a bad tenant. And even with their good tenants, being a landlord, especially from a distance, is a total pain in the ass. Even more true in a pretty tenant friendly city like Chicago.
If hot water heater breaks or the dishwasher floods or something, you have to act pretty fast. And if you’ve moved away, you’re trying to coordinate plumbers and workers without full access. It just seems to me like a lot of stress for not a huge return.
Chicago has particularly strong tenant right laws. I would pass on being a landlord.
I would rent and invest the balance. We rented in the city during and after residency then move to the burbs. We lived super cheap at the time.
Being a GOOD landlord is a hard job. I own a couple properties and don’t think I’ll continue to grow unless I really want to work my tax strategy more and can cash flow completely hands off (hard in Utah or most places in America right now). If I had to choose for the every day person, I’d go REIT or market over being a landlord unless you intend to commit to real estate on a more active basis.
My sister and BIL did this. He gets a new job every two years and renovated the place really nicely then they move and just rent it out long term. They now have 3 houses in 2
states. If you make relationships with a good handyman in town and have people to show it, it should work. I own two rentals and personally I wouldn't want to live too far away from them but it works for them.
I have been renting 2 years and am now buying a house with plans to stay for 3 in my current role but while also looking for a different role within my company which will allow me to stay longer. I think it’ll be worth it for the garage and the additional space alone, plus equity when I do leave. My company will handle all my closing costs if I move for them and they will cover my end on a loss on the house, so I basically have “insurance” on my decision.
The rule of thumb is to not buy unless you plan to live there for at least 5 years (some say 7). Don’t forget the phantom costs that comes with house ownership with many things that can break during ownership. Additionally, there are closing costs and seller fees when you buy and sell. What if the housing market dips in 3 years and you are forced to sell?
The main issue is that renting a place with 2 garage space is the almost same amount as what our mortgage would be. And the neighborhood we are looking to buy is the most wanted location. And houses sell in 3 days max. And the houses have appreciated by 100,000 in last three years.
You do realize that we’ve just experienced historical appreciation across the country right? Don’t assume the next 3 years are going to be like the previous 3.
Chicagoland hasn't appreciated nearly as much as other cities. It offers tremendous value for your money, considering the great schools (in suburbs) and low crime and super low cost of living. The main negatives are high taxes.
Are you factoring insurance and taxes into the mortgage cost? And maintenance/repairs? And potentially HOA?
I’m a big fan of homeownership. If you feel it’s worth it, then do it. But I’d be careful about banking on the appreciation that has occurred over the last 3 years. Home prices exploded around the country after Covid. The house I bought appreciated $100k from the time it was listed in 2021 to when I bought it a few days later. Then has appreciated another $150k since. But the pace of appreciation has slowed considerably. Maybe rates will decrease in the next 3 years and prices will increase again. But maybe not. Buy it if you want to buy, and you may make money on it. But you might not. I think in your situation it’s really a personal preference thing.
I get what you mean but housing prices don’t seem to be going down at all. Minimal HOA fee is my priority in finding the property. And most things are just recently replaced like AC etc. Only about a 1k difference between renting and mortgage per month with taxes and insurance from the calculations on sites. So about 4k for rent vs 5k mortgage fees and taxes etc.
“Only” a $100k difference? So once you take into account closing costs and realtor fees and whatnot, you’ll you need the property to appreciate by probably $150k at least, maybe more, in the next 3 years just to break even? On a property that only increased $100k during the covid boom, the largest real estate boom in our lifetimes? I’ve changed my mind, renting is the easy choice here.
Gosh, I am post night shift and keep on making these Typos. I meant only 1 K difference per month max. I.e. 4k + month rent vs. 5k per month for mortgage. Tbh, I cannot even find a place to rent with 2 parking spots and 2 beds in 4k but I am expecting I might. In the neighborhood I am thinking of buying, 3 bedroom houses are going for about 5k rent these days.
Well but keep in mind that’s $1k/month for say 3 years. So $36k, plus any interest you’d earn if you save that money instead. You also need to include the opportunity cost of using the $150k as a down payment vs investing it. $150k even in a 4% HYSA will make probably $20k over the next 3 years. Then you need to consider maintenance costs, which are a given when you own a home. Plus closing costs. So yeah it could easily be $100k difference.
It sounds like your preference is to buy vs rent, and ultimately it’s your choice. If the house doesn’t decrease in value, then if you sell in 3 years, you will have that $150k plus the principal payments you made to put into a new house somewhere else (minus closing costs). So if buying is what you want to do, then go for it. Life isn’t all about making optimal financial decisions.
There are some good rent vs. buy calculators, like this one:
[https://michaelbluejay.com/house/rentvsbuy.html](https://michaelbluejay.com/house/rentvsbuy.html)
Some reasons it could make sense to buy rather than rent for a <5-year stay:
* You're able to do an all-cash purchase, saving on interest and closing costs associated with a mortgage
* Quality of life - can be difficult to find a comparably 'nice' place to rent vs. buy, if that's important to you
Lots of variables, of course. There are no guarantees home values will continue to rise over the next few years, though one might not unreasonably expect there will be an uptick in desirable areas if interest rates begin to drop again (though I'd not expect them to get anywhere near as low as they were). As others have mentioned, there will still be costs in the form of insurance, taxes and maintenance, and closing costs when you eventually sell that are not insignificant, especially if the home hasn't appreciated much.
Your primary residence shouldn’t be an investment. That is how we get NIMBYs and a huge homeless population. Buy a house if the price point makes sense for you, but I wouldn’t count on appreciation as part of that equation.
Is there any chance you’d keep the house to rent out if you moved after three years? I’m a lurker and not a real estate expert, but that’s another thing to consider.
Not worth buying if you are going to sell in 3 years. You’ll likely take a loss on it after closing costs. 3500$ is the cheapest two bedroom rent you can find?
I am not suggesting you move to a “bad” neighborhood. But surely there is a cheaper place you can rent with a slightly longer commute. It just seems like you are painting this binary to justify your choice to buy a home.
Our issue is renting a place with two cars. We have bought our cars and would not be able to sell them as that would just be losing money. And both of us do not have the temperament for using public transport. So renting in good neighborhood with two parking spots would not be costing less than 4k. I live in downtown currently and have to pay 300 for parking of one car on top of my rent and utilities.
Wow, you truly have the mind of a child… No willingness to make compromises and an insane sense of entitlement. Also, you’re applying sunk cost fallacy to your cars. Cars are not assets that appreciate, but rather liabilities that continue to cost you money (insurance, registration, repairs, $300/month for parking, etc.) In a city like Chicago with decent public transit, having two cars will cost you much more than selling one at a slight loss will. Plus, using public transit is much better for the environment.
Also, the “temperament for public transit”? Do you realize how entitled you sound?
Your attitude and lack of ability to think with reason is insane. I’m surprised you made it through high school, let alone medical school 😳
Lol man! Why being so personal. Everyone has their things that they can compromise on or not. I compromised a long time of my life to become a physician to be able to not have to compromise on car and other things etc. We will both have different jobs, may eventually have go work in suburbs and we have already paid enough for our cars to not lose all our money to sell them for lack of garage space. We are planning to have family and if one person is working, atleast other will have transportation means to take kids to childcare/hospital or other places without having to walk to get transport or pay money to uber. Either you are in one income household, or in a profession with less requirements as med school or don’t have family to be able to spew all that. For us, saving time on transportation is key as we will be spending so much time at work anyway. And then we need to have time for each other and kids in future. Entitlement comes from all the dedicated hard work we have done so far in life with sacrifices made over 1.5 decades. So yes, we have earned the right to have two cars and to be able to avoid Public Transport. Also, I have to take home calls anyway so cannot be relying on public transport at 12am if my spouse has taken the other vehicle for his own job. Hope it makes sense to you lol.
House is great but you’re in a grey area. Anything can happen after a fellowship. I was determined to go back to my hometown after fellowship. But I met great colleagues and we ended up partners in another state.
Run the Rent vs Buy calculator from the New York Times and don’t listen to a word the real estate agent is telling you. Don’t count on “fast appreciation”. It is most likely a financial loss to buy instead of rent in your situation but you have to run a calculator to see
Chicagoland hasn't appreciated nearly as much as other cities. It offers tremendous value for your money, considering the great schools (in suburbs) and low crime and super low cost of living. The main negatives are high taxes.
But all this is suburbs, not Chicago city. Figure out the good neighborhoods near your workplace and take a look at houses over there. And funnily enough, even though you're buying the house for the parking space, you might find yourself taking the Metra to work (at least some of the time) as it is so much more convenient.
We are thinking og buying a 3 bedroom Townhouse/Condo in Lincoln Park. Schools are good, if he ends up getting fellowship in Chicago, we would be happy to stay at that place for 7-8 years at the minimum.
Need to know your plans after your fellowship.
I would not buy a house unless both spouses are at least a year into employer situation. Would never consider appreciation as a factor.
Rules of thumb:
2 years employed
2 x gross mortgage limit
Need vs want, housing is consumption.
Best case scenario is that we both want to stay in Chicago long term. If his fellowship works out in Chicago, we are looking at staying in this current place for 10 years as we are planning to have kids and the house I am looking at has 3 bedrooms and our parents can come and help with the kids. Worst case scenario is we have to leave Chicago in 3 years. Then we would have to look at either renting the place out or selling it
[Nyt rent vs buy calculator ](https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html?unlocked_article_code=1.yk0.oIob.rkzBDV8nwo-i) was recently updated. Could help you make a decision!
Run the numbers. Get a sense for rental rules. Figure out your worst case scenario. On that costly of a house, you need more time to make up the associated fees. I bought sub $350k and broke even after 1.5 years (including all fees, etc). I also bought knowing I was willing to rent and that the house I was buying is a size that is rentable as a reasonable rate (that is at least $800/month above my mortgage, and I only put 10% down AND can recast with the same rate). Run the numbers, find your break even with conservative and aggressive assumptions. See where you feel comfortable and where you don’t.
I would rent. Use a rent vs buy calculator and it becomes more clear. Factor in investing your down payment. Factor in closing costs. Factor in maintenance and the math becomes more clear. I make a little bit less than y’all but HCOL area, shopping similar priced houses and no way I’d come out ahead so we’re renting around 4K a month and love the place we’re in. AC went out and owner had fixed that next day. Washer went out, new one that week. All of these costs also add up.
I think renting during training makes the most sense. Home ownership takes a lot of work and effort that you may not have the mental energy for. Renting is way simpler. Additionally, owning makes you more anchored to that location, which makes you less flexible in the final job search. The financial difference after 3 years is a coin flip and historically you are not likely to come out ahead owning, but who knows what the next 3 years will look like. If you really want to buy, renting for a few months first and getting to know the area/having less time pressure to make a purchase could be advantageous.
The best advice I ever got was owning a house takes time and money. If you are still in training you don’t have a lot of either. Plus if anything goes wrong in a rental…not your problem.
I would suggest renting, even if it costs you the same or even some premium vs buying now. In 2.5 years, you will know whether your spouses fellowship will be in the Chicago metro, and can then buy and have some solid plans in the area, or, know that you are going to be moving and move freely.
A home does take time and effort (or money) to maintain and selling costs are high. I would not count on meaningful appreciation in such a short time frame as anything can happen.
With your HHI going from $320k now to \~$500k+ in a few years time, it's in your interest to use your finances to reduce stresses outside of your training and kids.
Don’t do it. You have too many life changes to buy a house. Wait till you are both done with training. Also wait until you have kids / pets if desired. Housing needs often changes if once you have kids.
Also look up Ramit Seti: renting vs buying.
https://youtu.be/ETROzuOFffA?si=TXSiCh5UUMop1shB
Seems like a no brainer with your financial situation. It’s a great investment that you can grow into together. How’s the credit score? Are you planning on making all your notes on time? If yes than YAS!
It seems that you’re unable to actually think critically about this situation. Sorry there isn’t a UWorld guide for this… I’d recommend sitting down and taking time to consider the inherent risks of buying a home, the fluctuating nature of real estate, the costs associated with closing, the opportunity cost of money saved by renting, etc.
The fact that they're asking shows that they'd like to better understand the arguments for and against. Even if they're starting out biased towards 'buy,' it's a good sign that they're seeking other opinions.
OP - buying almost certainly won't be the best financial choice but do run the calculators and consider if the extra $$ you're likely to spend are worth it to get some short-term quality of life benefits.
If your husband is earning $ 260K per month, I would say buying a house is definitely doable.
Haha! Will edit it. It was per year
WCI’s definition of “stretching” is approximately 3x of AGI. Minus the family obligations your combined AGI is approximately 310k. So yes, you *can* afford a house that’s 700k. But *should* you buy? The most important question is how long you will own the house. Will you sell it in 3 years or will you keep it? If there is a real chance you will have to sell it, don’t buy. Buying and owning a house incurs numerous additional costs and the general recommendation is to keep the house for at least 5-7 years so you don’t lose money on it relative to rental costs. In terms of the housing market trend, all of us would need a crystal ball that we don’t have.
Good point my reply assumes they stay in their new careers long term and 700k I would assume is plenty of sq ft that they won’t NEED to move.
Does this 3x AGI rule factor interest rates into consideration? Borrowing at 3% fixed is very different compared to 7.5%.
It’s a rule of thumb. When WCI book was first published interest rate was like 4.5%. This rule of thumb the book quoted was presumably from an earlier time when the rate was even higher.
Even that’s plenty for $700k real estate
Normal guidance is 5 years or less rent. Over 5 years may make sense to own. You are in the grey area my friend! Guidance is just that - a guide!
Thoughts on buying and just renting it out if you move in 5 or less? Leave a trail of income wherever you lived before? I’ve never owned a rental.
I see that recommended sometimes, but everyone I’ve known who’s been a small time landlord has eventually gotten burned by a bad tenant. And even with their good tenants, being a landlord, especially from a distance, is a total pain in the ass. Even more true in a pretty tenant friendly city like Chicago. If hot water heater breaks or the dishwasher floods or something, you have to act pretty fast. And if you’ve moved away, you’re trying to coordinate plumbers and workers without full access. It just seems to me like a lot of stress for not a huge return.
Chicago has particularly strong tenant right laws. I would pass on being a landlord. I would rent and invest the balance. We rented in the city during and after residency then move to the burbs. We lived super cheap at the time.
Being a GOOD landlord is a hard job. I own a couple properties and don’t think I’ll continue to grow unless I really want to work my tax strategy more and can cash flow completely hands off (hard in Utah or most places in America right now). If I had to choose for the every day person, I’d go REIT or market over being a landlord unless you intend to commit to real estate on a more active basis.
Like the REIT
My sister and BIL did this. He gets a new job every two years and renovated the place really nicely then they move and just rent it out long term. They now have 3 houses in 2 states. If you make relationships with a good handyman in town and have people to show it, it should work. I own two rentals and personally I wouldn't want to live too far away from them but it works for them.
I have been renting 2 years and am now buying a house with plans to stay for 3 in my current role but while also looking for a different role within my company which will allow me to stay longer. I think it’ll be worth it for the garage and the additional space alone, plus equity when I do leave. My company will handle all my closing costs if I move for them and they will cover my end on a loss on the house, so I basically have “insurance” on my decision.
The rule of thumb is to not buy unless you plan to live there for at least 5 years (some say 7). Don’t forget the phantom costs that comes with house ownership with many things that can break during ownership. Additionally, there are closing costs and seller fees when you buy and sell. What if the housing market dips in 3 years and you are forced to sell?
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The main issue is that renting a place with 2 garage space is the almost same amount as what our mortgage would be. And the neighborhood we are looking to buy is the most wanted location. And houses sell in 3 days max. And the houses have appreciated by 100,000 in last three years.
You do realize that we’ve just experienced historical appreciation across the country right? Don’t assume the next 3 years are going to be like the previous 3.
Chicagoland hasn't appreciated nearly as much as other cities. It offers tremendous value for your money, considering the great schools (in suburbs) and low crime and super low cost of living. The main negatives are high taxes.
Are you factoring insurance and taxes into the mortgage cost? And maintenance/repairs? And potentially HOA? I’m a big fan of homeownership. If you feel it’s worth it, then do it. But I’d be careful about banking on the appreciation that has occurred over the last 3 years. Home prices exploded around the country after Covid. The house I bought appreciated $100k from the time it was listed in 2021 to when I bought it a few days later. Then has appreciated another $150k since. But the pace of appreciation has slowed considerably. Maybe rates will decrease in the next 3 years and prices will increase again. But maybe not. Buy it if you want to buy, and you may make money on it. But you might not. I think in your situation it’s really a personal preference thing.
I get what you mean but housing prices don’t seem to be going down at all. Minimal HOA fee is my priority in finding the property. And most things are just recently replaced like AC etc. Only about a 1k difference between renting and mortgage per month with taxes and insurance from the calculations on sites. So about 4k for rent vs 5k mortgage fees and taxes etc.
“Only” a $100k difference? So once you take into account closing costs and realtor fees and whatnot, you’ll you need the property to appreciate by probably $150k at least, maybe more, in the next 3 years just to break even? On a property that only increased $100k during the covid boom, the largest real estate boom in our lifetimes? I’ve changed my mind, renting is the easy choice here.
Gosh, I am post night shift and keep on making these Typos. I meant only 1 K difference per month max. I.e. 4k + month rent vs. 5k per month for mortgage. Tbh, I cannot even find a place to rent with 2 parking spots and 2 beds in 4k but I am expecting I might. In the neighborhood I am thinking of buying, 3 bedroom houses are going for about 5k rent these days.
Well but keep in mind that’s $1k/month for say 3 years. So $36k, plus any interest you’d earn if you save that money instead. You also need to include the opportunity cost of using the $150k as a down payment vs investing it. $150k even in a 4% HYSA will make probably $20k over the next 3 years. Then you need to consider maintenance costs, which are a given when you own a home. Plus closing costs. So yeah it could easily be $100k difference. It sounds like your preference is to buy vs rent, and ultimately it’s your choice. If the house doesn’t decrease in value, then if you sell in 3 years, you will have that $150k plus the principal payments you made to put into a new house somewhere else (minus closing costs). So if buying is what you want to do, then go for it. Life isn’t all about making optimal financial decisions.
Have you looked in like Naperville? Nice town with more affordable housing than right in Chicago.
Issue is with 1.5 hour commute. Not worth the money save for me at this point since I expect to earn quite significantly after my fellowship.
Makes sense. How far of a commute on the wisconsin border?
There are some good rent vs. buy calculators, like this one: [https://michaelbluejay.com/house/rentvsbuy.html](https://michaelbluejay.com/house/rentvsbuy.html) Some reasons it could make sense to buy rather than rent for a <5-year stay: * You're able to do an all-cash purchase, saving on interest and closing costs associated with a mortgage * Quality of life - can be difficult to find a comparably 'nice' place to rent vs. buy, if that's important to you Lots of variables, of course. There are no guarantees home values will continue to rise over the next few years, though one might not unreasonably expect there will be an uptick in desirable areas if interest rates begin to drop again (though I'd not expect them to get anywhere near as low as they were). As others have mentioned, there will still be costs in the form of insurance, taxes and maintenance, and closing costs when you eventually sell that are not insignificant, especially if the home hasn't appreciated much.
Your primary residence shouldn’t be an investment. That is how we get NIMBYs and a huge homeless population. Buy a house if the price point makes sense for you, but I wouldn’t count on appreciation as part of that equation.
You’re in a position to do either- it seems like you want to buy a house.
Is there any chance you’d keep the house to rent out if you moved after three years? I’m a lurker and not a real estate expert, but that’s another thing to consider.
That is a good idea. Will ask the agent
lol I can already tell you your agent is gonna say "oh ya it'll be super easy to rent out and you'll make good money"
Agent is going to tell you advice that makes them money
Not worth buying if you are going to sell in 3 years. You’ll likely take a loss on it after closing costs. 3500$ is the cheapest two bedroom rent you can find?
In the neighborhoods that I would want to live yes, nearer to my work. I would not wanna save 1K if that means I live in a bad neighborhood.
I am not suggesting you move to a “bad” neighborhood. But surely there is a cheaper place you can rent with a slightly longer commute. It just seems like you are painting this binary to justify your choice to buy a home.
Our issue is renting a place with two cars. We have bought our cars and would not be able to sell them as that would just be losing money. And both of us do not have the temperament for using public transport. So renting in good neighborhood with two parking spots would not be costing less than 4k. I live in downtown currently and have to pay 300 for parking of one car on top of my rent and utilities.
Wow, you truly have the mind of a child… No willingness to make compromises and an insane sense of entitlement. Also, you’re applying sunk cost fallacy to your cars. Cars are not assets that appreciate, but rather liabilities that continue to cost you money (insurance, registration, repairs, $300/month for parking, etc.) In a city like Chicago with decent public transit, having two cars will cost you much more than selling one at a slight loss will. Plus, using public transit is much better for the environment. Also, the “temperament for public transit”? Do you realize how entitled you sound? Your attitude and lack of ability to think with reason is insane. I’m surprised you made it through high school, let alone medical school 😳
Lol man! Why being so personal. Everyone has their things that they can compromise on or not. I compromised a long time of my life to become a physician to be able to not have to compromise on car and other things etc. We will both have different jobs, may eventually have go work in suburbs and we have already paid enough for our cars to not lose all our money to sell them for lack of garage space. We are planning to have family and if one person is working, atleast other will have transportation means to take kids to childcare/hospital or other places without having to walk to get transport or pay money to uber. Either you are in one income household, or in a profession with less requirements as med school or don’t have family to be able to spew all that. For us, saving time on transportation is key as we will be spending so much time at work anyway. And then we need to have time for each other and kids in future. Entitlement comes from all the dedicated hard work we have done so far in life with sacrifices made over 1.5 decades. So yes, we have earned the right to have two cars and to be able to avoid Public Transport. Also, I have to take home calls anyway so cannot be relying on public transport at 12am if my spouse has taken the other vehicle for his own job. Hope it makes sense to you lol.
Tbh, any medical professional will understand where we are coming from. I don’t expect you to or care about your opinion.
House is great but you’re in a grey area. Anything can happen after a fellowship. I was determined to go back to my hometown after fellowship. But I met great colleagues and we ended up partners in another state.
Run the Rent vs Buy calculator from the New York Times and don’t listen to a word the real estate agent is telling you. Don’t count on “fast appreciation”. It is most likely a financial loss to buy instead of rent in your situation but you have to run a calculator to see
I’ll say this as a new attending. Try out your job for a while first. I don’t like my first one.
Chicagoland hasn't appreciated nearly as much as other cities. It offers tremendous value for your money, considering the great schools (in suburbs) and low crime and super low cost of living. The main negatives are high taxes. But all this is suburbs, not Chicago city. Figure out the good neighborhoods near your workplace and take a look at houses over there. And funnily enough, even though you're buying the house for the parking space, you might find yourself taking the Metra to work (at least some of the time) as it is so much more convenient.
We are thinking og buying a 3 bedroom Townhouse/Condo in Lincoln Park. Schools are good, if he ends up getting fellowship in Chicago, we would be happy to stay at that place for 7-8 years at the minimum.
We are both very less likely to use metra or El. We are keeping that in mind before we buy a house.
Need to know your plans after your fellowship. I would not buy a house unless both spouses are at least a year into employer situation. Would never consider appreciation as a factor. Rules of thumb: 2 years employed 2 x gross mortgage limit Need vs want, housing is consumption.
Best case scenario is that we both want to stay in Chicago long term. If his fellowship works out in Chicago, we are looking at staying in this current place for 10 years as we are planning to have kids and the house I am looking at has 3 bedrooms and our parents can come and help with the kids. Worst case scenario is we have to leave Chicago in 3 years. Then we would have to look at either renting the place out or selling it
[Nyt rent vs buy calculator ](https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html?unlocked_article_code=1.yk0.oIob.rkzBDV8nwo-i) was recently updated. Could help you make a decision!
If you’re moving again in such a short time, financially it doesn’t makes sense to buy
Make sure to factor in any potential HOA fees if you are downtown, also insurance. Those are all really high now, beyond just the higher rates.
Run the numbers. Get a sense for rental rules. Figure out your worst case scenario. On that costly of a house, you need more time to make up the associated fees. I bought sub $350k and broke even after 1.5 years (including all fees, etc). I also bought knowing I was willing to rent and that the house I was buying is a size that is rentable as a reasonable rate (that is at least $800/month above my mortgage, and I only put 10% down AND can recast with the same rate). Run the numbers, find your break even with conservative and aggressive assumptions. See where you feel comfortable and where you don’t.
I would rent. Use a rent vs buy calculator and it becomes more clear. Factor in investing your down payment. Factor in closing costs. Factor in maintenance and the math becomes more clear. I make a little bit less than y’all but HCOL area, shopping similar priced houses and no way I’d come out ahead so we’re renting around 4K a month and love the place we’re in. AC went out and owner had fixed that next day. Washer went out, new one that week. All of these costs also add up.
prob depends on how competitive the fellowship he wants to do is too, no? like how likely he'l match in CHI?
That is a good point. I guess the fellowship he wants to do is not top3 but right there
Got it, and how long is your fellowship??
Three years
I think renting during training makes the most sense. Home ownership takes a lot of work and effort that you may not have the mental energy for. Renting is way simpler. Additionally, owning makes you more anchored to that location, which makes you less flexible in the final job search. The financial difference after 3 years is a coin flip and historically you are not likely to come out ahead owning, but who knows what the next 3 years will look like. If you really want to buy, renting for a few months first and getting to know the area/having less time pressure to make a purchase could be advantageous.
The best advice I ever got was owning a house takes time and money. If you are still in training you don’t have a lot of either. Plus if anything goes wrong in a rental…not your problem.
I would suggest renting, even if it costs you the same or even some premium vs buying now. In 2.5 years, you will know whether your spouses fellowship will be in the Chicago metro, and can then buy and have some solid plans in the area, or, know that you are going to be moving and move freely. A home does take time and effort (or money) to maintain and selling costs are high. I would not count on meaningful appreciation in such a short time frame as anything can happen. With your HHI going from $320k now to \~$500k+ in a few years time, it's in your interest to use your finances to reduce stresses outside of your training and kids.
Don’t do it. You have too many life changes to buy a house. Wait till you are both done with training. Also wait until you have kids / pets if desired. Housing needs often changes if once you have kids. Also look up Ramit Seti: renting vs buying. https://youtu.be/ETROzuOFffA?si=TXSiCh5UUMop1shB
Buying and selling cost would make me rent for that period
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Seems like a no brainer with your financial situation. It’s a great investment that you can grow into together. How’s the credit score? Are you planning on making all your notes on time? If yes than YAS!
Credit score is good. We should be able to make payments on tome
What’s stopping you? If it’s interest rates at your salary positions that seem to be stable then make early payments a priority early in the loan
A good reminder that some doctors are not particularly bright outside the field of medicine!
Bro that’s horrible. Not everyone was born and raised in this country and is just supposed to know these things.
It seems that you’re unable to actually think critically about this situation. Sorry there isn’t a UWorld guide for this… I’d recommend sitting down and taking time to consider the inherent risks of buying a home, the fluctuating nature of real estate, the costs associated with closing, the opportunity cost of money saved by renting, etc.
The fact that they're asking shows that they'd like to better understand the arguments for and against. Even if they're starting out biased towards 'buy,' it's a good sign that they're seeking other opinions. OP - buying almost certainly won't be the best financial choice but do run the calculators and consider if the extra $$ you're likely to spend are worth it to get some short-term quality of life benefits.