Should you Rent or Own as a Doctor?
The decision to own or rent greatly depends on where you are in your career. Whether you’re a new resident or you’ve retired from practice will have a huge impact on the decision to rent or own as a doctor. For most doctors, after residency, it will make sense to buy, but not always.
Those in residency have a much different decision as they may be moving as soon as they complete their residency. There are several factors to consider before deciding to buy or to rent. Here’s a look at some of those factors to help you decide if it’s the right time to buy a home or if you should continue to rent.
How Permanent is your Position?
For many doctors or future doctors, moving is just a part of the territory. You may have moved when you went from your undergraduate degree into medical school and you may be preparing to move again as you complete your residency. Even once you’ve entered your field of work; it’s possible you could move every few years, depending on the opportunities and the type of medicine you practice.
One of the biggest factors in the decision of a doctor to rent or buy is how permanent the position you currently hold is and will be in the future. If you believe you will be working at the same location, in the same city for several years, buying makes sense. However, if you’re unsure if you’ll still be working at the same place, renting may be a better choice.
What’s your Financial Situation?
The financial situation of a physician changes over time. Often, you’re dealing with paying off massive student loans when you first graduate from medical school, but these loans won’t be there forever. Your financial situation will also play a rather large factor in the decision to rent or buy.
However, it may not play as big of a role as you might think. With the ability to use what is known as a doctor loan or physician loan, you may be able to buy with little or no money down, even if you have huge student loans to pay off and you don’t make a ton of cash yet.
The doctor loan program mitigates the risk for the lender by using future earnings as a factor. They come with several benefits, such as no need to purchase mortgage insurance and you don’t necessarily have to have paystubs to prove your income. Often, these loans will use an employment contract showing proof of future earnings and you will likely be required to keep an account with the lending bank for automatic electronic payments.
There are benefits to buying a house and renting a house for doctors. Not every situation is the same. However, if you plan to stay put for at least a few years, it makes more sense to buy than rent, in most circumstances.
Buying a home is an investment and allows you the ability to actually put your money into something you own instead of something your landlord owns. However, if you’re not sure how permanent your current position is, renting until you have a more permanent situation might be the right choice.
There is no wrong or right answer, but doctor loans do make it much easier to buy. When you buy, you also have the opportunity to turn your first property into a rental property when you’re ready to upgrade. This is also possible if your situation changes and you need to relocate for a new position.