In this episode, Emily presents first-person stories from grad students who bought homes during grad school. The volunteers were simply asked to share their stories of home ownership, whatever they may be. You’ll hear from three volunteers throughout this episode, both on how they purchased their homes but also what’s happened since then, the benefits and the challenges. Perhaps you’ll be inspired to pursue home ownership yourself sooner rather than later. The final person included in this episode is a mortgage originator specializing in early-career PhDs, who summarizes why graduate students and anyone paid by fellowship have a difficult time securing a mortgage and his system for framing them as qualified borrowers.

Links mentioned in the Episode

• Emily’s E-mail Address
• Don’t Accept Admission to a PhD Program without a Sufficient Stipend (Free Webinar on Friday, July 14, 2023 at 10:00 AM PT)
• PF for PhDs S10E18: This Grad Student Purchased a House with a Friend
• Host a PF for PhDs Seminar at Your Institution
• AMA on the PhD Home-Buying Process (Free Live Q&A)
  • Sam Hogan, Mortgage Originator/Emily’s Brother
    • Sam Hogan’s Cell #: (540) 478-5803
• PF for PhDs Subscribe to Mailing List
• Podcast Show Notes Page

Teaser

00:00 Courtney B: Owning a house is all about the long game. We hope to see large returns on the remodeling and roofing work once we sell, but for now we have to be willing to put a decent amount of cash down for deductibles, emergencies and our new monthly loan payment.

Introduction

00:18 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others.

00:47 Emily: This is Season 15, Episode 2, and today we’re featuring first-person stories from grad students who bought homes during grad school. I simply asked the volunteers to share their stories of home ownership, whatever they may be. You’ll hear from three volunteers throughout this episode, both on how they purchased their homes but also what’s happened since then, the benefits and the challenges. Perhaps you’ll be inspired to pursue home ownership yourself sooner rather than later. The final person included in this episode is a mortgage originator specializing in early-career PhDs, who summarizes why graduate students and anyone paid by fellowship often have a difficult time securing a mortgage and his system for framing them as qualified borrowers.

01:32 Emily: By the way, there is still time to volunteer for one of the compilation episodes coming up later in the summer, specifically the episode on unions and unionization movements. If you have a story to share on that topic from the last few years, please email me at [email protected].

01:52 Emily: This next announcement is specifically for those of you who are applying to PhD programs in the US in the upcoming academic year. If you’re not in that group, please share this information with someone who is! On Friday, July 14, 2023 at 10:00 AM Pacific Time, I’m delivering a free webinar titled “Don’t Accept Admission to a PhD Program without a Sufficient Stipend.” Yes, this is something you need to understand and commit to even before you start applying to PhD programs! The three phases of this webinar are to go over why you need to be sufficiently financially supported in your PhD program and what that means to you; how you can ensure that you will be; and what actions you need to take in the fall during application season, in the spring during admissions season, and in the summer before you matriculate to make this come about. This webinar includes what I wish I had known as a prospective graduate student and the hidden financial curriculum of academia that it’s taken me over a decade to uncover. It’s so vitally important for prospective graduate students to have this information early, which is why I’m giving it away for free! Please help me spread the word! Anyone interested can register for the webinar at PFforPhDs.com/sufficientstipend/.

03:20 Emily: You can find the show notes for this episode at PFforPhDs.com/s15e2/. Without further ado, here’s our compilation episode on home ownership.

Hannah Stroud, PhD Student: College Station, TX

03:37 Hannah S: Hi, my name is Hannah Stroud. I am a final year PhD student at Texas a and m University, uh, which is located in College Station, Texas. College Station, Texas is a city with a extremely low cost of living compared to other areas of this country, uh, which is pretty much the only reason that I am here sharing my home ownership story with you today. , I guess I started my PhD in 2020 and purchased my house in March of 2021, and I had been a grad student before that and had been living in college station since 2014, so I’ve been here a while. Uh, and the low cost of living in this area in general allowed me to save a pretty substantial amount of my stipend just comparatively. So in my master’s, I think I was paying like six 50 in rent, uh, per month, uh, which meant that a decent portion of my stipend could go to fun activities or savings in general.

04:37 Hannah S: Um, how I grew my savings was through a robo-advisor managed, uh, money market account and also ETF investments. Um, and that was really helpful in kind of just turning what I had saved into enough to be able to afford a down payment. Uh, and so when I started the kind of mortgage lending process, um, in the first month of my PhD, so I am a fellowship student, which means my income is not w2 and I’m a NSF GFP fellow, which means that my intimate income is guaranteed for three years. So when I started my mortgage process, uh, that was important to my lender. What I didn’t realize is that when my mortgage rates were locked in, uh, they wanted my three years of employment to be verified from the time of closing. So when I closed six months later, I actually ran into some issues, uh, where my lender wanted some way to guarantee that I would be employed at the same salary that I’m currently making, uh, for three full years, not the two and a half that I could promise based on the time that had elapsed.

05: 43 Hannah S: Um, so I ended up needing to increase my down payment to the full 20% so that I didn’t have to qualify for private mortgage insurance anymore. But ultimately, the main aspect of my home ownership story is truly luck. Uh, I’m very fortunate to live in a very low cost of living city, and the timing of the pandemic honestly played a lot into the house prices being very low and mortgage rates being what they were. So given the current environment, I don’t know that a lot of this advice is incredibly applicable, uh, but advice that does stay the same is the, if you have non W2 income, it is important to learn from your desired lender. What aspects of your income are important to them, and if three years of proof of income will be required from the time of closing, it’s been a fun experience overall.

06:41 Hannah S: Ultimately, owning is significantly more expensive than renting because when things break, I am my own landlord and I get to fix them, and sometimes those expenses are more significant than I would like them to be. Uh, within the first kind of few months of owning my home, uh, both the washer and dryer that came out, the house broke, and so I needed to replace those. Um, and I found out that my non-mobile house had a mobile home shower installed in it, and all the plastic parts were degrading, so I needed to, uh, replace all that with copper piping and plumbers are expensive, and then any electrical issues become your problem, AC issues become your problem. So definitely get the home warranty. Uh, if you can include that in the conditions of closing and ha have it be something that the seller pays for, I would recommend that highly. And then I renewed it for a second year as well, cuz my air conditioning unit was pretty old. Um, and that ended up being the right choice for me just because the, the amount of maintenance that I required on, on that particular utility was, was significant in the second year as well. So yeah, hopefully you have as good of luck on your journey as I’ve had online and yeah, good luck going forward.

H, PhD Student: East Coast

08:00 Emily: This submission is from “H”, a PhD student who lives on the East Coast. Quote. I had a vague plan to buy my place in my second or third year of my program, but it ended up happening in a surprising and rushed way when a house came up right in my neighborhood, I had something like a month to close, which I did in August, 2020 at the beginning of the second year of my program. My income has increased since I got the house, so the monthly payment, including mortgage insurance and property tax, is now a little less than a third of my post-tax income. Initially it was closer to 40%. Having roommates in various configurations has offset between 25% and 65% of my payment at any one time. But there have also been months between roommates where I’ve been covering the whole amount. I’ve had kind of a revolving door of housemates, which has been a lovely part of having my house.

08:49 Emily: So far it’s been friends or friends of friends, almost all grad students because my roommates and I, I have so far always been gone for the summer, I rented out for more like 85% of the mortgage to people doing summer internships. Here it offsets the fact that my July and August stipend payment is lower than my 10 month academic year stipend payment. I charge less than market rent because I’m not a professional landlord and I don’t have a property manager. The house is old and not in perfect shape. When I’ve had water in the basement, a broken water heater or a broken window, people have been understanding and patience since I’m not charging a lot, I’m also able to undercharge because I have a financial safety net. My parents lent me almost all of the deposit and I won’t start paying them back until I finished my program.

09:33 Emily: Their justification was that they had paid the same amount for my siblings law school. We’ll pay them back interest free. I would’ve been able to get a place on my own, but it would’ve been smaller and I would’ve bought later. The fact that I have a financial safety net has made being a homeowner less stressful. I haven’t had to ask my parents for money for repairs so far, but I can sleep at night knowing I’d be able to borrow money from them if I urgently needed a new roof or something. I love having an old house, but because of the upkeep, I think it would be too stressful to own one without that kind of cushion. It was very much a pandemic home purchase. I remember reading all these articles in 2020 and 2021 about people who are desperate for more space when working from home and how they had overpaid for falling apart houses.

10:17 Emily: I was like, oh my God, is that me? Now with the interest rates up, the news is all about people who lucked out with 2% interest rates like me, and now their incentive is just to never sell. Sometimes I think about how my mortgage on the house is twice what I was paying for a one bedroom apartment and how I spent money on repairs and my bills are much higher than in the apartment. And I wonder what would’ve happened if I had plugged the difference into an index fund instead. But if the house has increased in value, as much as Zillow says the house wins out as an investment, obviously you have to take Zillow with a grain of salt. I think only time will tell whether this was a good financial decision or not, regardless of whether it turns out to have been a good investment.

10:55 Emily: I have so many great memories of this house. I love having space to host and being able to provide a gathering place, especially in the pandemic. When I hosted people from out of town who needed a break from being isolated alone in their apartments. I’ve loved becoming closer to my housemates. I’ve had friends stay in the house when their family were visiting from abroad and needed a place to stay. I feel happy that the house has helped people out with somewhere to stay when other solutions were expensive and logistically difficult. I’ve loved being able to host my family, especially at the holidays. A lot of this would just not be possible if I were renting. I know that buying a house is normally seen as tying you down, but for me, I think it’s given me the freedom to be mobile. Having the house has allowed me to be pretty flexible during the latter part of my program, which requires research abroad.

11:40 Emily: I offset the monthly payment by renting it out so I don’t feel like I’m obligated to stay there just because I’m paying for it. When I’ve worked abroad on a job that included housing or got grants that covered my housing while researching, I’ve been able to save a good amount of money, money by reducing my housing expenses, but I also didn’t need to formally move out and I know I can come back whenever because there’s still a spare room compared to having to deal with paying for storage and finding a place during awkward lease gaps. I’m able to be much more of a free agent than other people I know Doing dissertation research abroad, it’s just one of the many ways that being financially secure makes the experience of being a grad student dramatically less stressful. I think it’s important to recognize that my financial privilege and home ownership, along with my citizenship, have given me greater research capacities. I’m not sure what I’ll end up doing with a house after I leave the program. I might rent it out on a more formal basis or if I decide to buy elsewhere, I might sell. End quote.

Courtney Beringer, PhD Student: Corvallis, OR

12:37 Emily: This next submission is from Courtney Beringer, who was previously interviewed on this podcast in season 10, episode 18.

12:45 Courtney B: My name is Courtney and I’m a third year PhD student in civil engineering at Oregon State University in Corvallis, Oregon. Uh, I recorded a podcast with Emily shortly after I bought a house in 21, so I’ll briefly talk about that and dive into what has happened since then. I bought a house with my friend in July, 2021 in Corvallis, Oregon for about $250,000. It’s a three bedroom, two bath with an additional room that we converted into a bedroom. My co borrower and I live in the house along with our two tenants. Our mortgage is about $1,500 a month, and our rental income is, uh, $1,300 a month. Um, we were patient and took months to find a house that met our needs of being within about five miles of campus. Um, had rooms we could rent out and was under our budget of about $320,000. Our loan process was made, uh, a little complicated by having co borrowers who were not related or married.

13:50 Courtney B: And because we were both grad students with changing sources of income throughout the year, we worked with our loan officer through these hurdles and everything actually turned out great. It has now been two years as homeowners and with tenants. Uh, it has been great to have a passive side income through renters. We have enjoyed the freedom that home ownership has provided, uh, but home ownership is always unpredictable. We had a water heater leak in January this year, which caused my co-owner one of our tenants and I to live in a hotel for two months while demo and construction occurred in my room and our shared bathroom insurance covered so much. But this took a lot of time out of our studies and lives to move, make remodeling decisions and coordinate with contractors, and we just got a roof place, which added a $13,000 loan to our joint finances. Owning a house is all about the long game. We hope to see large returns on the remodeling and roofing work once we sell, but for now, we have to be willing to put a decent amount of cash down for deductibles, emergencies, and our new monthly loan payment. Uh, I hope my story gives you a sense of the joys and realities of being a homeowner.

Commercial

15:07 Emily: Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as taxes, goal-setting, investing, frugality, increasing income, or student loans, each tailored specifically for graduate students and postdocs? I offer seminars and workshops on these topics and more in a variety of formats, and I’m now booking for the 2023-2024 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker or facilitator to your university, graduate school, graduate student association, or postdoc office? My seminars are usually slated as professional development or personal wellness. Ask the potential host to go to PFforPhDs.com/speaking/ or simply email me at [email protected] to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

Anonymous, PhD Student: Atlanta, GA

16:26 Emily: This submission is from an anonymous contributor. When they mentioned Sam in the course of this contribution, they’re referring to Sam Hogan, a mortgage originator specializing in early career PhDs. And we’re actually gonna hear from Sam next

16:39 Emily: Quote. I purchased a home during the spring semester of my first year as a PhD in Atlanta, Georgia. I closed in April, 2023. I have been debating home ownership since 2020. I would be entering graduate school in my early thirties, so I wanted to try and build wealth so that I wouldn’t be too far behind in retirement savings or net worth. When I finished in my late thirties, my parents were not convinced that buying was the right move. So when I moved back home to Atlanta to start school, I ended up renting a beautiful old studio. But in January of spring semester, when I was informed that rent would be going up $200, I realized that I was ready to buy and that I needed it to happen fast.

17:18 Emily: I tried several different mortgage lenders, but most were rather confused by the stipend structure. I would get pre-approved based upon my credit score and lack of debt, but then would always receive several follow-up emails asking for documents from my university, asking for verification and explanations. I turned to Sam fairly early on, just asked him questions and then ended up going back to work with him after the other lenders didn’t work out. I received my pre-approval from Movement Mortgage with no follow-up questions and began house hunting. In late January, maybe eight or nine bids later, I finally landed on a home, not a condo, which had been my original call, but HOAs kept blowing my budget in late March with a closed date in early April. For a moment, there was a bout of panic because the house has an unfinished primary suite and we, Sam, my realtor and myself, didn’t know if it would pass appraisal the suite, huge bedroom, bathroom closet was essentially a bonus room or a garage.

18:11 Emily: The outside structure was finished, but there was nothing else. No drywall, no electric, nothing. Ultimately, the house passed appraisal, the seller contributed to closing and Sam even managed to get me a few hundred dollars back at closing. Looking back, this story sounds really straightforward, but it was super stressful. I also switched realtors during this process and I wish that I had done so earlier. I was also saving between $800 and a thousand dollars a month between January and April to make the down payment, and also ended up basically emptying my investment account and my Roth ira, both of which had less than $2,000 in them. I put 3% down on a home that was less than $200,000 a total steal in Atlanta. All in all, I’m glad that none of the other bids worked out. This home is spacious, has a lovely yard, is in a great location, and the unfinished primary suite will multiply the value of the home.

19:01 Emily: Of course, the house will need a lot of work, but I have a roommate and we’re both excited to get our hands dirty. My biggest piece of advice is to remember that the people who help you purchase your home need to advocate for you. Sam is a phenomenal advocate and helped me get into my first home and stopped at nothing to make the sale work. The realtor who I ended up working with was also an amazing communicator, and I wish that I had been working with him the entire time. Of course, save money and do your research, but remember that the people on your team matter. End quote.

Sam Hogan, Mortgage Originator

19:36 Sam H: Greetings. This is Sam Hogan. I help graduate students, postdocs and PhDs achieve home ownership in all 50 states. We’ve closed hundreds of loans for PhD students and postdocs. They have a unique, uh, income set and require unique mortgage approval process. Um, having done this for over four years now, we are the nation’s only lender that focuses on your success while you’re getting your degrees in higher education. My team is a longstanding advertiser and sponsor of PF for PhDs, and I am delighted to also be Emily’s little brother. So Emily reached out to me in, um, spring 2019, um, having seen a pattern of difficulties for PhD students, um, closing on home loans.

20:29 Sam H: The issue with PhD income is that the loan officer in the pre-approval stage will either pre-approve them and not do enough work themselves or deny them out the gate. Now, when an underwriter sees the PhD income after loan offer, pre, pre-approved them, them, it might not have enough information about the stability and continuance in history, and you also can be issued a denial because the underwriter doesn’t have to give you a final approval based on those offer letters. Um, after some a few months of investigating, we developed a system to properly document the income, the continuance, and the stability. Um, regardless of how soon or how late you are in your PhD stipend continuance, where I come in is demonstrating that the borrower who’s a PhD student has always been a full-time student, has always maintained a good gpa, has a track record of staying in the same field of science or research.

21:34 Sam H: We do have to over document a file sometimes to demonstrate continuance, but even if we have less than three years, we are able to help the underwriters understand the quality of individual behind this stipend income, which has helped us become successful in closing loans in this space. I will rescue PhD deals every single month. This happens often with, uh, new construction builders and their lender is completely unfamiliar. Or some other companies like, um, loan Depot for example, will just outright never accept stipend income. So those clients will read my reviews or, uh, find Emily’s blog where we give a little bit more of in depth information on how it works. Um, I’ll connect with them and they will become homeowners and protect their deposit, have a more stress-free approval working with us versus a lender. Loan officers. Not, not familiar. When we originally started helping PhD students and post-docs become homeowner, homeowners, we were more comfortable with having three years of continuance.

22:42 Sam H: So at the early years or maybe before your first semester of becoming a PhD student, that was our, um, bread and butter easy approvals with confirming that income. As we’ve done more PhDs and expanding to more states, we’ve actually seen some success helping PhDs who are in their later stipend years, years four, five, sometimes six. Um, so really we just need to make sure that we can show history and continuance. Even if you’re stipend might be ending in a few months, we can still help you. We just like to show the career field that you’re going into and some other details about your career path and your future successes. A lot of home buyers in this market are not excited about taking higher than a 5% rate, and I wanted to just encourage people that it is much more difficult to find the home than to get a mortgage on it. So we say in our industry, marry the house date the rate. Once you’ve found your home and rates improve, you’ll be able to refinance and lower your payments and lower your total interest paid. What you don’t want to do is wait for rates to get a little bit lower and then the market is flooded with buyers and you have more competition searching for that same home.

24:03 Sam H: Having to read originated loans for seven years working with the PhD community just makes my life such a breeze. Everyone is very responsive, calm, cool, and collective. They understand what I’m talking about and they’re willing to listen to me explain a little bit extra about the home buy-in process so they can have a better understanding of it. Unfortunately, there’s not a lot of standard education on how to buy a home or how to get a mortgage, but that’s okay because you have people like myself who are willing to take the time to help you understand and find success in this space. But working with the PhD community has been, um, so wonderful over the last four years. I I wouldn’t trade it for anything. Having to having clients who, um, are attentive to your requests. I, I will say well qualified, a good, good credit scores and goal oriented. If you’re committing, uh, five or six years to a new area and you don’t wanna waste five or six years worth of rent, you know, please reach out to myself. The best number to reach me is 540-478-5803. Um, and I’m looking forward to hearing from you. Happy hunting.

25:14 Emily: I host monthly. Ask me anything with Sam. So if you’d like to meet him and ask a question about mortgages or the home buying process, please register for our next one pfforphds.com/mortgage.

Outtro

25:32 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.