Broker Check

The Right Way to Purchase Your Home

Big house, green grass, picket fence and all...the American dream, right?

Absolutely!  Home ownership is awesome.  However, it's part of the overall financial plan that is often messed up and here's why;

Most physicians, with good credit, could get approved for a loan of 30-40% of their income and they have all the right in the world to do so.  However, we feel this would be a huge mistake!

Think about it.  You're a $250,000 physician in a 30% plus tax bracket and use 40% on a home purchase. What's left to pay off student loans, invest, live your life etc...not much.

At White Coat, we advocate that no more than 15% of your gross monthly income go toward the mortgage so that you can still save at a high level, aggressively get rid of all the high interest debt, and enjoy life more. See our 'Essentials of a Sound Financial Plan' in the Education Center for more.   

Pen to paper; a physician earning $250,000 per year would have $3,125 (15%) going toward the monthly mortgage.  In today's environment that would get you in to about a $450,000 house...nice!

Other important factors to consider; 

  • How much should you "put down?"
  • What are local property taxes in that particular community?
  • What would the insurance payments be for your new home? 
  • Are there association fees?

The last nugget we'll add here is if you are a first time home buyer; the mortgage will be the cheap part about getting into a new home!  If you're going from a 1,200 square foot apartment to a 3,500 square foot home with a yard, there will be many additional expenses that often get overlooked.  You'll need new furniture to fill extra space, art for the walls, more TVs, a new lawn mower (or pay someone to do it), etc.  Factor in these additional costs, along with your down payment prior to signing the paperwork.  Trust us.  We've seen physicians make this mistake many times. We don't want to see this happen to you. 

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