Friday, June 6, 2008

Housing

Finding housing can be one of the most exciting and stressful experiences of the pre-matriculated medical student. While obtaining all the necessary documentation, supplies, and loans it is crucial not forget that you have to live somewhere. I was actually surprised to learn that my wife and I could afford more than a one bedroom home from Monopoly.

Studies have shown that individuals who buy a home tend to have more money saved than those who continue to rent. In our case we had to choose between paying $1200 for rent every month or paying a mortgage of $900-1100. Obviously the former choice would be throwing money to the wind whereas the later would ultimately build equity in our name. The decision was not hard to make as you could imagine. With that in mind, this blog will concentrate more on the purchase of a new home rather than renting a unit.

Home Loan
Many of us who are entering medical school have never purchased a home and likely do not have the money to afford paying cash for one. Currently, we are in a 'buyers' market which means it is easier and cheaper for buyers to get a home. Certainly my wife and I would love to have a lavish home with furnishings and the like, but neither of us make the kind of money that would be required for this to happen.

Our first task was to find a mortgage lender, someone who could determine how much home we could afford. Through a careful review of our expenses, debts owed, savings, and salary we could determine a monthly mortgage payment that would not be too expensive for our budget. In our case, I do not plan to work as I will be a student. This means one salary will be figured into the equation, which is usually a safe way to avoid foreclosure.

The goal here was to become pre-qualified and pre-approved. Qualified simply means you are eligible for a loan where approved means you have the loan waiting to be used. Sellers prefer an approved buyer as they will not have problems receiving their money. Thus pre-approved buyers have a greater chance of purchasing the home they want sooner than a buyer that is only pre-qualified.

Now that my wife and I knew how much our monthly payments would be, we also knew the price range in homes that we should be seeking. This significantly reduces the amount of homes in our search and allows for a more focused house hunt.

Location
Knowing where your school is located and the neighborhoods in the area helps greatly when looking for a new home. In my case, I would like to be able to live close enough that I could bike to and from school. Not only to economize with rising gas prices, but for the sake of exercise and proximity. If you are fortunate, Google will have your neighborhood on their street view allowing you to see it online before visiting in person.

Safety, climate, populations and other information may be useful as you look for the perfect place to call home. Consider your city's reported values and how they compare to national averages. After all, a purchase suggests you will be there for an extended period and you want to be certain it is the right place for you.

Realtor
Let's face it, you are strapped for time and orientation is just around the corner. Looking for all the available homes would be impossible without a realtor who's job is to help you find the right place. Our lender helped us find a realtor and we have been running ever since.

Know what your home must have so your realtor can narrow down the listings. We chose to have at least three bedrooms and two baths. The garage was not mandatory, but it would be nice for storage purposes. Having the proper hook-ups for a washer and dryer were the other must as the coin laundry gets really expensive. Other things to consider would be cabinetry, appliances, basement, landscaping, backyard and remodeled features.

Walk Through
Since you will be eating, sleeping and studying in your new home, you had better like it. Take time to actually walk through the home yourself or have someone you know do it in your place. If you are out of town, the realtor could take pictures of the home and email them for your approval.

We drove to Las Vegas and stayed with family over Memorial Day weekend. Our realtor sought out homes to visit and we spent a couple days looking at various locations, properties and options (condominiums and houses). This visit was valuable as we could see the homes and their respective neighborhoods. Unfortunately, the real estate market is moving fast and the homes we tried to obtain were already sold by the end of the weekend. This only emphasizes the need to start early.

Many of the homes on the market today are repossessed by banks as foreclosures. The savings can be extremely valuable. In fact, the only homes that we visited were foreclosed as they were in good condition, newer models, and most importantly in our price range. For example the home we are currently looking to buy has been reduced in price by more than $100,000 in less than three years!

Buying Your New Home
So you have finally found the home you like. Your realtor and lender will do most of the difficult paperwork and organizing your offers to the seller. Once accepted they work out the details necessary to close in a timely manner and you make your move into your new home.

Any day now we will be hearing back from the bank as to whether our offer was accepted. It is stressful not knowing if we need to keep looking for other homes or if we can start planning our move in its entirety. In the meantime, wish us luck and happy hunting!

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