So I guess I'm an adult now?
April 7, 2012 9:02 AM Subscribe
Should a med student buy a house?
posted by The White Hat to work & money (33 answers total) 3 users marked this as a favorite
I'm a second-year MD/MPH student with the following loans currently in deferment:
- $90,430 Stafford (6.8%)
- $36,771 GradPLUS (7.9%)
As I have three more years of school, the total loan debt will increase to ~($300,000) by the time I'm finished. I am guaranteed to stay in Philadelphia for these three years, and will likely remain in the City for at least three more years to complete my residency (probably family med; not very competitive).
My grandmother is giving each of her grandchildren $26,000 (in two payments of $13,000, one year apart), and I am considering using my share to put a downpayment on a house in the coming months. My question is regarding the relative wisdom in buying said house compared to either 1) paying down my GradPLUS loan or 2) investing the money.
My current understanding is that even considering the interest that would accrue on the $26,000 of gradPLUS that I could pay off, it would not exceed the equity that I would build in a house (through the $26,000 + money that would otherwise go toward rent over three years). The model that led me to this conclusion was drawn up on a napkin and is almost certainly missing a number of variables.
What am I missing? Should I buy or continue renting? How should I think through this?