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THE “FIVE-FIVE” FINANCIAL RULE

By Staff Reporters

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Many of the pros of home ownership will appeal to medical retirees for whom their home is their castle and who appreciate being settled both financially and geographically:

• 1. Building equity in your home: Each mortgage payment you make brings you closer to owning your house free and clear with no payments. If you can buy a new home or condo outright by selling your current home, you can still build equity in your new home over time.
• 2. Predictability: If you have a fixed-rate mortgage, your mortgage payments will remain consistent for years and you don’t have to worry about a landlord ever making you move.
• 3. Tax benefits: You can deduct mortgage interest and property taxes up to certain limits.
• 4. Customization: You don’t need a landlord’s permission to alter and improve your home.
• 5. Home appreciation: Homes generally increase in value, so you can increase your net worth by owning a property.

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Renting also has five significant upsides, particularly for physician retirees who want greater freedom to travel and to make bigger moves — potentially across the country or even abroad:

• 1. Extreme flexibility: You can leave your property after giving notice and go wherever you want much more easily than with an illiquid home you’d have to sell first.
• 2. Lower upfront costs: You only have to pay first and last month’s rent and a security deposit to move into a rental, not make a large home down payment.
• 3. No maintenance concerns: If something breaks, your landlord is responsible for the cost of fixing it and the actual repairs. You don’t have to build up an emergency fund for maintenance.
• 4. Predictable expenses: For the duration of your lease, your monthly housing costs including utilities will remain consistent, even if the cost of energy goes up, for example.
• 5. Lack of worry: If you’re in a rental apartment, you won’t have to concern yourself with shoveling snow, mowing grass or other matters of upkeep.

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