"Tips for physician first-time home buyers"

[Guest Ian Wong]

Here's an article from the Medical Post giving advice and tips for physicians looking to purchase their first homes. I think an awful lot of my class is considering purchasing their first house once they discover which city they'll be living in for residency, at least among those students who'll be in town for at least 4-5 years, or who otherwise have spouses or previous savings that would enable them to buy rather than rent.

 

Link to Article:

 

Ian

UBC, Med 4

[Guest DrSahsi]

I debated buying this year, but put it off. The decision is different for each person, but if you're hooked up with the CMA, I urge you to take advantage of the services of MD Management. Their financial advice was extremely valuable when making decisions as complex as a home purchase.

 

It's tempting to think about putting money down on a mortgage instead of into rent, but there are a lot of hidden costs to consider. Investigate carefully.

[Guest MayFlower1]

Dr. Sashi,

 

Your comment on "hidden costs" is a great one...as a second time home owner, here are some things to consider before closing, upon closing and thereafter:

 

Pre-Closing

========

 

- When you make an offer on a home you have to have a certified cheque to submit with your offer. This is submitted to and held by the vendors lawyer and applied against the "balance owing" upon closing. The typical amount of this cheque is between 5 and 10K, depending on the price of the home and the state of the market (i.e., competitive or not)

 

- Lawyer: you should have a lawyer review your offer for purchase. Most lawyers want a retainer of a few thousand dollars prior to formally engaging with you.

 

- Downpayment: You don't want to get into a high-ratio mortgage if at all possible...you want 25% of the purchase price as a downpayment, otherwise you're paying a few thousand extra dollars just for high-ratio mortgage insurance...a real waste of valuable money

 

- Inspection: Don't let ANYBODY tell you not to have an inspection of your home as part of the condition of sale. If you buy a home and there's a problem that only an expert could reasonably be expected to find you will have no recourse. An inspection only cost a few hundred dollars...well worth it. After moving into my second home a major problem was found with the drainage in our addition...the inspector should have found it...they were successfully sued for the repairs required...settled out of court.

 

Closing

=====

 

- of course, you have to pay your lawyer. When I purchased my first home this was about 2.5K...the second home I purchased cost me about 3K.

 

- you have to pay for any outstanding taxes that the vendor has pre-paid...it was about 2K for the last purchase I made.

 

- the remainder of your downpayment is due.

 

- moving expenses (a few hundred bucks if you do it yourself up to several thousand if you've got lots of stuff and hire someone to do it for you)

 

- locksmith...I highly recommend paying this few hundred dollars to have all your locks re-keyed upon closing.

 

- land transfer tax: I still don't know what the heck this is for...it's a percentage of your purchase price (it was about 900 bucks for my first home which cost 120K...it was substantially more, I can't remember the figure, for my current home which was about 230K. I believe there is a program (Ontario Home Owners Savings Plan -- OHOSP) which you can take advantage of as a first time home owner...you essentially don't pay most or all of your land transfer tax...ask your lawyer about it...

 

Post-Closing

=========

 

- you should have about 1K set aside for things you'll need in your new home...lightbulbs...paint...plaster...curtains...mops...you'd be surprised at how quickly this will add up.

 

- also, you should have a few thousand put aside for anything that might break in your first year of ownership (e.g., furnace...new one costs about 5K, at least)

 

The joys of owning a new home are numerous...the stressors during the purchase and early post-purchase experience are also numerous...nothing can prepare you...but you definitely don't want to be house-poor...and more stressed out by not having a bit of cash on hand...so put some aside for those unexpected things.

 

If I think of any other "hidden" costs which surprised me I'll edit this post.

 

Peter

[Guest krnboy]

come on...you guys are doctors

buy a mansion

for crying out loud, you guys can afford it! :rollin

[Guest faqir9]

Anybody know what is the availability of mortgage financing pre-residency (while still a student)?

[Guest aneliz]

Hey krnboy:

 

Mansions eh? Sad reality of the new MD grad is this:

 

1. Living in rented accomodation (often very student accomodation like basement appartments, rooms in other people's houses, etc)

 

2. Driving car worth <$10 000 to keep OSAP funding....

 

3. Student debt of ~$125 000

 

4. Gross income of $40 000/yr as PGY1

 

Can't quite figure out how to finance the 'mansion' in all that....

[Guest krnboy]

oh that sucks then... >:

All my friends will graduate from comp sci and engineering programs in their mid 20s, get a job and buy a nice house within 3 years...

They'll get a decent house when they're 28 while I'll be struggling to pay my debt and live in basement of someone's house when I'm 32

:x

[Guest UWOMED2005]

Krnboy: Not to sound too dreary, but I don't think your friends should be counting on that either. The High Tech bubble is dead. I had a few friends make the argument you just made with me when I was in early undergrad - namely, that they'd be rolling in cash in the Ottawa High Tech scene while I was living in a basement apartment missing the May 2-4 studying. Well, I am living in a basement apartment missing the May 2-4 studying, but many/most of them are living in their parents basements after being laid off back in 2000/01 or not getting hired in the first place. The days of computer science being an extremely lucrative field are for the most part over. . . I'd count on that field coming back to reality and making something similar to those in other business/engineering fields. And those fields aren't great right now either. . . my brother is a recent engineer grad and has gone back to school to do grad work as the job situation is so dreary right now.

 

But yes, they probably will be making house payments before you if you choose to go into medicine.

 

If you want a nice house try to break into the NHL. . . but make your $$ quickly as the collective bargaining agreement is expiring soon and I anticipate a salary cap!

 

faqir9: I have a few classmates who have bought property and started paying off mortgages in London. I'm not sure of the details, but I'm pretty sure parents were involved in most cases making downpayments, cosigning mortgages, signing mortgages (one friend pays his parents the balance of the mortgage and it's in their name) or outright buying the condo/house. So it can be done, but usually involves parents who have the means to do such things.

[Guest faqir9]

was the comma inclusive or exclusive? ie, (if you know) with a downpayment can a student get financing alone?

[Guest cheech10]

The "or" at the end of the list should tell you that it's exclusive, so yes students should be able to get mortgages/financing on their own.

[Guest UWOMED2005]

Actually, I meant the list as inclusive. But the truth is I really don't know. . . you should check it out for yourself.

[Guest Ian Wong]

Floating to the top...

 

Ian