Heading back to school. What would you do?

[Anonymous]

Thanks for the thoughtful responses. As far as professional degree, it's in the line of a degree in medicine, law, optometry, etc. and the city is similar to St. Louis. We were hoping to find a foreclosure, but real estate agents are telling us it would take 6 months to a year to close on one.

I really dislike my job, and I am as high as I can possibly be on the totem pole, so nothing but meager raises are in my future. Both DH and I are ready to leave this area. And I worked really hard to get into the program that I'm going into, years of night classes, entrance exams, etcetera.

[Anonymous]

OP, I'm in a somewhat similar situation. I just quit my job and enrolled in graduate school. My DH makes in the $140's and we have a 2 yr old. Juggling kid, school, and home is difficult, but I'm pursuing my dream career, so hoping it will be worth it. I cannot imagine adding moving to a new city, managing a rental property from afar, and buying a fixer-upper. I will pile on with the other PP's saying something has to give.

I am looking at $80,000 in school loans when my program is complete-- nothing to sneeze at, but probably still less than a professional degree (i 'm assuming that means JD, MD, MBA??). Student loan debt and carrying 2 mortgages will stretch you very thin. Of you really want to go to school, do it, but don't add all this unnecessary burden! At least rent for a year while you get settled in your new city and program. Best of luck! I just finished my first semester and have no regrets so far

[Anonymous]

The three degrees you mentioned are extremely expensive with a long-term commitment to education. Since you are committed to this path I strongly recommend you use a financial advisor to make sure you manage your financial risk. Also know that young kids, debt and intense programs can put a ton of stress on a marriage (check out the divorce rates of many law programs).

[Anonymous]

Anonymous wrote:The three degrees you mentioned are extremely expensive with a long-term commitment to education. Since you are committed to this path I strongly recommend you use a financial advisor to make sure you manage your financial risk. Also know that young kids, debt and intense programs can put a ton of stress on a marriage (check out the divorce rates of many law programs).

I am pretty sure the reason OP is not telling us the type of degree is because she doesn't actually want the thread to devolve into a discussion of the degree's value.

[Anonymous]

Whatever you do, do not go to law school. Even kids graduating from top schools are struggling to get crummy jobs.

[Anonymous]

Anonymous wrote:No, we don't plan to return to DC, but hope to rent it out in the long run and use it as actual income. Condo fees are exorbitant now, but the HOA plans to decrease them in the coming years , so that should help. I was hoping to sell the condo and put that money towards DC's college in about 18 years. We also don't plan to keep the property in the new city for more than our time there.

There's your answer. Due to selling costs, I'd rent. Go to bankrate.com for calculators that tell you whether it's better to rent or buy with your personal situation. You can customize it.

[Anonymous]

Definitely use a calculator. It varies a lot based on your specific circumstances, but generally you want to be in a house at least five years to make purchasing a better option than renting. Except possibly if you're in a longer phd program, my guess is the better calculators will tell you to rent (especially since you'll still be able to deduct the interest on your condo for the first few years).

[Anonymous]

Anonymous wrote:

So, here's my question.

1. Do I really need to put 20% down? I'd like to have some actual cash in savings for emergencies.
2. Can we somehow convert some of the renovation budget into the new mortgage?
3. If we don't find something we love, would it make sense to just rent a place?

Apologies. I've always been anxious about money, and we put 20% down for our current home about 8 years ago, so not doing that also worries me a bit. But I hate to rent b/c I equate it to just throwing money away. And I'd love a home, a real home (not just a condo) for our DC.

TIA

1) No, if you both have excellent credit you should be fine with 10%. But be aware that not all lenders will accept your anticipated rental income, so you may need to qualify by being able to carry both mortgages, with no rental income. Some lenders will accept a signed lease as proof of prospective income. Fannie Mae guidelines allow this but it's a matter of lender risk appetite.

2) Generally, yes, but it depends. The St Louis poster above is talking about a specific product where you do construction/reno immediately on the house. If you have no set schedule for the renos you would be better with a home equity line of credit.

3) It really depends on where this place is and whether you would stay. Some real estate markets are on an upswing and it makes sense to buy for 5 years (DC). Some are in long term decline and it may be wiser to rent (Cleveland). Some feel like gambling in a casino (Detroit, Las Vegas).

Find a good mortgage broker in this new city, who you can trust.

As other PPs pointed out, your cash flow margin on your condo before the tax benefit is currently very slim. But it will improve a lot if you hold it for 15-20 years until your kid is in college, as you intend.

Hope this helps. Good luck!

[Anonymous]

OP here. I just wanted to thank the latest set of responders. Very useful info to ponder. Much appreciated!