Most of us have some idea what our dream home will be like. That’s great, but save it for later.
IF YOU ARE BEGINNING RESIDENCY
In 3-5 years, you are going to be trying to sell your house in a fairly tight window of time. You want that process to be easy. So consider these things:
• You want a house that will sell quickly because it’s the kind of house everyone wants. The cute cottage on 2 acres outside of town, the post-modern fence made of spears that have been bent into plowshares, or the downtown loft over the coolest bar in town may all require a little too much of a niche buyer.
• You want to have some negotiating space on your selling price when you are ready to sell. If you buy the most house you can afford right now and put down a small down-payment, it may very likely come back to bite you when you need to sell quickly but can’t drop your price any lower because of how much you still owe the bank.
• A brand new house and a house over 15 years old may both have more maintenance requirements than you will have time for in residency. Get a boring, 5-10 year old house that will teach you about home-ownership but you won’t shed too many tears over when you leave.
• Remember your spouse, if you’re married. You’re not actually going to be there all that much so let their preferences prevail on this one.
There are of course, exception to all of this. For instance, we bought a fixer-upper and I spent the first 18 months remodeling. It turned out great for us and for another resident family whose husband also had some construction skills. But there was greater risk involved as well.
IF YOU ARE LEAVING RESIDENCY
Everyone’s situation is different, but generally speaking, the advice to keep living as you did in residency until you get out of debt applies to buying a house as well.
There might easily be a $600-$800 /month difference between the house you qualify for and the house you can comfortably live in. At the low end, that’s $36,000 in 5 years just in house payment. Utilities and mainenance wil just add to that number.
In addition to the finanical piece, there is the fact that you may not know the city you are moving to very well. Living there for a while in a less expensive home can save you money and help you to make a better choice when it comes time to start looking for the house you want to stay in.