Getting a loan for a condo, as a student

[Chuck1986]

I am a 24-yr old graduate student, planning to graduate in 2012 with my doctorate in pharmacy (to become a pharmacist - pay is about 100-120k/year). Next year I'll be moving to Arizona for my final year of school to do my clinical rotations. I plan on settling in AZ permanently. Thus, I'd like to buy a condo next summer. I'm tired of renting an apartment - I essentially throw my money down a black hole cuz being a renter, I get NO return on this investment. I have looked at condos and the ones that interest me run 60-100k for 2-bedrooms/2-bath, 1000-1200 sq ft.

I have 6 years of really good credit. Last I checked my score was a 760 or 765 if I remember correctly. I'm concerned about getting rejected for a loan cuz I'm not working right now with this full-time courseload and I'll graduate with about 25k in student loans. My parents seem hesitant to co-sign cuz they want me to wait until I am finished with school to buy property but I desperately want to take advantage of how Arizona property values have hit rock bottom and again, I am tired of wasting my money renting an apartment that has no return on investment. I even calculated my monthly payments would be LESS for a 20-30 yr loan on a condo than they would be for renting an apartment.

Think I'd qualify for a loan? Any advice? Thanks!

 

[Al]

Originally Posted By: Chuck1986
I have looked at condos and the ones that interest me run 60-100k for 2-bedrooms/2-bath, 1000-1200 sq ft.
I'll graduate with about 25k in student loans. My parents seem hesitant to co-sign cuz they want me to wait until I am finished with school to buy property but I desperately want to take advantage of how Arizona property values have hit rock bottom and again

I agree with your parents. With a student loan, and the fact that you do not yet have a job..bad idea IMHO. Bear in mind there is no guarantee that we are at the bottom of this thing.

And bear in mind that the first few years you pay almost zero towards the principle of house. So if you sold it in 5 years you have buying costs, selling costs, unknown taxes, and almost no principle paid, and no guarantee that you will be gainfully employed.

You are not seeing any risk. I see lots.

 

[CivicFan]

No job, no income, I am guessing no down payment will probably mean loan rejection. The lenders have become more strict since the financial meltdown in 2008.

I would advise to talk to a lender to see what your options are.

Also, it is wise to not see your house as an investment but a roof over your head. Owning a house is a lot more expensive than just the mortgage payment and taxes.

 

[Carbon]

It sounds like a good move if you can put down a 20% down payment. Maybe even with 10%. You might even get seller financing in some cases. I would contact a local real estate agent for a better view as to what is typically available to you.

 

[Pop_Rivit]

Do you have a job, an income, and a substantial down payment?

If so, then it might be a good investment.

If not, then I sincerely hope that credit has tightened enough so that someone with no job/income can't get a 100K loan, no matter who might co-sign.

At your age I was in a similar position, but in addition to graduate studies I had a job and income. We purchased our first home shortly before I graduated, but my wife was already working for her first law firm and we could afford it. We were able to put almost 50% of the original purchase price, put 8 years of sweat equity into it, and sold it for about 10 times the original purchase price.

 

[Mr Nice]

I know some people who own a condo and they say its a pain in the [censored] with all the drama and rules. Why not just purchase a 'starter home' and avoid the headaches.

The housing bubble burst in Arizona and I'm sure there are tons of nice entry level homes you could afford.

 

[eljefino]

Walk into a bank and ask. Worst case is they have a distressed property they want off their books. Worst case for them is they'll have a warm body in there and they can repo it again.

Just see about pre-qualification; don't pay the hundreds of dollars for a appraisal or anything else. If the loan officer isn't a total half-wit they'll keep you in mind at least for when you get work.

 

[wallyuwl]

Without a job you won't get approved. Even if you had an assistantship somehow (I don't think those are common in pharmacy, or other professional programs or clinical doctorate programs), it wouldn't be enough to get you a loan. Unless you have enough money to pay for the condo in cash, you won't get approved. This is not 2006. And as was said, we might not even be at the bottom of this thing, especially in a market like AZ.

 

[Mr Nice]

Home prices still needs to drop anoter 10%

 

[JHZR2]

no cash/income = no loan. How were you going to pay the mortgage? Transfer debt from it to a student loan? what about the condo association fee?

I see nothing but problems.

While they may not be the absolute best deals, I think you might be ideal for a rent to own option from a private seller. This would let you slowly buy down a property, while not having the same kind of risk.

 

[bretfraz]

I agree with the others - no job + no verifiable income = no loan. Same with trying to get a car loan.

Credit score has much less meaning when buying a home or car. Banks want detailed financial documentation including bank statements showing paycheck deposits, 2 yrs tax returns, etc. Having a good credit score might help in getting a credit card, but not much else.

You do not need to be in a rush to get a house, esp a condo. The PHX housing market is going nowhere fast. There is no upside in the near future in AZ. Only reason now to consider buying a home is for shelter. The concept of owning a home as an appreciating investment is dead..... at least for the next 5-10 years.

The smart renter would partner with real estate agents in a desireable area to find an upscale, stylish home or condo to rent at a discount price. Why live in a dull apt complex when you can live in a nice home for a fraction of the mortgage payment? Something to consider if you're going to rent, which is what you should be doing now anyway.

 

[hr1940]

You never know where your best job offer will come from and you do not want anything tying you down. Some places are nice to visit but you would not want to be there year round -- it is different as an adult living there on your own. Remember that when you rent you do not have to pay the taxes, do the repairs, and you only need renters insurance. If you have bad neighbors you can let someone else deal with it or move.

 

[LS2JSTS]

Originally Posted By: LT4 Vette
Home prices still needs to drop anoter 10%


Really? Is this based on your analysis of the entire real estate market across every different market in the country?

FWIW, blanket statements like this are never right, they may be for a small sliver of a particular market. But they never hold true across the wide spectrum of variables in a complex real estate market.
For example, there are certain markets within SE Michigan, one of the hardest hit in the country, that either never saw the huge hit most have seen, or they are already seeing a slight increase in values over the smaller drops they've seen in the last four years.

To the OP, I find little to fault with your thinking. My parents used the same strategy when I went to college and I will do the same when my kids go. Buying a condo or smaller rental house vs paying for room and board that the college makes profit on makes good sense. Instead of throwing money down a hole for five or six years, we made a small profit upon selling the house.
If you can afford the payments it might be the way to go, if you are sure you will be staying in that market to live after graduation. It IS a great time to buy, but NOT a good time to sell. You may get a great offer for double the salary 500 miles away, then you would lose cash. With your field being in such high demand you WILL get offers that may be tempting to move for...If I were you, I may heed Helens advice and stay liquid...the ability to move on a dime in your situation could be valuable as well.

 

[saberz]

Housing costs in NJ need to drop significantly. Homes are still out of reach of people who earn combined incomes of 80-100k. That or lower the taxes(and we have the HIGHEST property taxes in the US). Some towns have 10-15k taxes. Thats an additional 900-1.5k a month that you pay on top of your mortgage. You can find homes that are 200k, or even 150k that have 10-15k year taxes. It's sickening.

 

[Win]

I have no idea about your loan eligibility, but where I live, condominiums are a terrible investment - you couldn't give one to me.

I would look at duplexes, four plexes, single family homes you could use as a rent house later, even a large cardboard box, before a condo.

Know your local market, though, as what prevails here may have little to no relevance where you live.

 

[LS2JSTS]

Originally Posted By: Anies
Housing costs in NJ need to drop significantly. Homes are still out of reach of people who earn combined incomes of 80-100k. That or lower the taxes(and we have the HIGHEST property taxes in the US). Some towns have 10-15k taxes. Thats an additional 900-1.5k a month that you pay on top of your mortgage. You can find homes that are 200k, or even 150k that have 10-15k year taxes. It's sickening.


I would call that a taxation problem, not a housing cost problem. I agree though property taxes are confiscatory in a lot of areas.

FWIW, I know people who own vacant lots on certain lakes up north here in Michigan that pay $10,000-$20,000 per year in taxes on vacant 100'-200' lake front lots.

Seperating school funding from being directly tied to home assessments and tax revenues wold be a great first step.

 

[Al]

Originally Posted By: LS2JSTS

To the OP, I find little to fault with your thinking. My parents used the same strategy when I went to college and I will do the same when my kids go.

Times have changed. But I would hope you might adopt the strategy of helping the kid come out of colege debt free. Thats the strategy I employed when I graduated in 1969. And I paid for my son's education....just as was done for me. He took care of his own home. ...when he felt he could afford it.

I'd tell you how successful its been for him but then I'd be bragging.

But if you want to cosign for 100's of thousands of loans while the kids still have school loans..that's your right.

 

[ryansride2017]

I know its extreme, and very uncommon nowadays, but I wish I would have lived in an economical apartment when I got out of college, socked away all the money I could, and bought our first house in cash. The feeling of owning something outright, whether it be a house, car, or even a couch, is priceless. If I could only accomplish one thing in my life, it would be to successfully portray that to my 3 sons.

 

[CivicFan]

Originally Posted By: LS2JSTS
Seperating school funding from being directly tied to home assessments and tax revenues wold be a great first step.


Property taxes are a self-segregation strategy. Based on the rates, it keeps out certain demographic groups.

Education tied to property taxes plays a similar role where the higher earning households obtain better education resources.

 

[LS2JSTS]

Originally Posted By: Al
Originally Posted By: LS2JSTS

To the OP, I find little to fault with your thinking. My parents used the same strategy when I went to college and I will do the same when my kids go.

Times have changed. But I would hope you might adopt the strategy of helping the kid come out of colege debt free. Thats the strategy I employed when I graduated in 1969. And I paid for my son's education....just as was done for me. He took care of his own home. ...when he felt he could afford it.

I'd tell you how successful its been for him but then I'd be bragging.

But if you want to cosign for 100's of thousands of loans while the kids still have school loans..that's your right.


Sorry, maybe I wasn't clear enough. When I went to school my father bought a small rental home in that town, when I left school he sold it at a profit. I plan to do the same. The debt was his, not mine...but in all honesty what difference would it make if the ability to pay is present. Not all college kids are broke, although I agree a mountain of debt CAN be a bad thing it doesn't make it neccesarily so. All depends on the financial situation that person finds themselves in, doesnt it?