Career and Life Planning Guidebook for Medical Residents

In This Chapter Recommended Tool Mortgage Calculator-Home Affordability Use this calculator to estimate your monthly payments by inputting different mortgage amounts, interest rates and term (# of months to payoff). http://md.careers/C-07 R E A D : Develop a Housing Plan The first priority is to develop a plan for your own housing. There are three approaches that are reasonable for a new attending. The first is to rent for a year or even two as an attending. This allows you to make sure you’re a good fit for the job, boost your income, save up a 20% down payment, and get a great deal both on the house and on the mortgage. The second approach is to use a “physician loan” to buy the dream house right out of residency. Although a physician loan will allow you to avoid the dreaded PMI (Private Mortgage Insurance simply insures the lender against your default on the loan), the fees and interest rate will be higher for a physician mortgage than a conventional 15- year fixed mortgage with 20% down. Instead of saving the down payment before buying a house, you would save it after buying the house by paying down the mortgage to the point where you could refinance it with a better mortgage. Alternatively, you could use the money that would have gone toward a down payment and put it toward the student loans or the nest egg. If you choose to use a physician mortgage, be sure you don’t just fritter away the money that would have otherwise gone toward a 20% down payment. The third option is to buy a “starter home” and save the down payment for the dream house within the starter home. This was the approach I took, since I knew I would be moving after four years anyway when I left the military. I wasn’t able to come up with a down payment on a dream home quickly upon residency graduation, but I could scrape up enough to buy a little town home. We nearly had it paid off after four years and were able to take that home equity and use it as a down payment on the dream home. If you use this approach, you can either sell the starter home to get the equity or you can take the equity out by refinancing and turn the starter home into an investment property. Financial Life Planning 357 WWW.PHYSICIANCAREERPLANNING.COM