Bank of America no longer offering same deal

[Eli T]

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Bank of America is still offering the Loans for Physicians program, but one needs to have "premier banking". (This does not sound like us.) The program varies from state to state (by a few hundred dollars I am told) but generally requires that the MD or soon to be MD has a $100,000 in assets. (NOT LOANS mind you.) I have just been smacked down from this program. There is always the possibility of waiving of requirements (like having your banker waive a minimum monthly balance) but I have not had this occur yet.

Good luck.

Additionally, some lenders (or mortgage brokers) have said that the student loans that have appeared on my credit report WILL be counted against me for debt to income ratios, even though they are/will be deferred for at least 2 years (in 12 month increments.) If this happens to interns, you can count on securing a loan that might afford one of the hubcaps from the mobile home you buy, or maybe some 2x4s for the tree house you build on national forest land.

After having said this, I note that we are exactly one month from closing and counting. I'll keep the forum posted if people are interested.

If anyone has actually gotten a loan/purchased a house and has significant student debt, then please post.

E😱

 

[Castro Viejo]

I've spoken to several no-name lenders who will not count our student debt when figuring out how much we can borrow. These are 30-year fixed rate mortgages at a 6% interest.

Since I've been busy with my subinternship (in medicine 🙁) and studying for Step 2, I haven't followed up on this. If anyone has any specific information on a good deal, please let me (and everyone else) know.

 

[Macken]

Hey....

I've been a mortgage underwriter for longer than I want to admit. I will be starting med school in the fall, so for what it's worth....

The general guideline is that student loans are not considered in qualifying if it can be shown that they are deferred for at least 12 months after closing. This guideline applies for FHA, VA, FNMA, and FHLMC loans. There are a few private lenders that may have different guidelines, but the overwhelming majority should not be counting them if they meet the 12-mo deferral guideline.

If you find a lender that doesn't know this (and believe me, I've met MANY of them...), I'd keep pushing it up the ladder until you find someone that knows their underwriting guidelines and will look at it the right way.

Hope this helps.

 

[Eli T]

Thanks for the information.

Most lenders with whom I have spoken ask if the loans are deferred for 2 or 3 years. 12 months is certainly more attractive to medical students.

Generally, the problems are that

1. Loans (unless you have a Stafford from pre 1993) are deferred for economic hardship on a 12 month at a time basis. (There is no automatic internship/residency deferrment for our later loans.)

2. Most of us (myself included) will wait to defer when our grace period is expiring, or at least until we are just about to start residency. I am in grace but will need to apply for deferrment in June (after I see what the new rates are and decide upon consolidation.)

The FAid officer at my school drafts a document that suggests strongly that students (with sufficient debt) will qualify for economic hardship deferment. I hope that this documentation is sufficient, because if the underwriter asks for PROOF that I am in a 12 month deferrment, then I am sunk. Closing day will likely come and go before that gets straightened out.

Another potential problem is pay stubs, although it seems obvious that short of a contract, my residency can supply some confirmation of upcoming work.

Still, I feel pretty anxious about the whole deal. We grad students moving into professional careers through a reduced salary interim period are just square pegs trying to fit into the round hole of joe homebuyer. Some folks seem to look at us and see an opportunity to invest (faith and cash) in us now with the hope that we will be likely to continue working with them when we are making a bunch more cash. Others think of us as people who on paper appear to be bankrupt: outstanding loans dwarfing assets.

On top of all of this, a broker in the area told me that as of Jan 2003, all Fannie Mae loans will count deferred loans against the borrower in the debt to income ratio. I called the Freddie Mac folks and was told that they too do that. This is totally unsubstantiated, but I don't want to be the first to find out in an actual deal.

Follow up on Bank of America. A friend and fellow medical student of mine is moving to Charlottesville Virginia and called the Bank of America there to inquire about loans. She was told that she might get a 5/1 ARM at 4.75 no points, no down, and no PMI. That sure sounds a lot like the Dr. Loans.

The same night I got a call at home with a mortgage officer from Bank of America who quoted on my machine a 5/1 ARM with 1 point (20% down) at 3.875%.

This was last night. I don't think that anyone offers such a low rate. Rather, I think that she was quoting me a straight up variable rate. She was to email me a good faith this morning, but it never happened. I wonder if she realized here mistake.

I would always check what they say.

If anyone has actually closed on a house after securing a mortgage loan then please share your experience.

Eli

 

[Eli T]

Here is a question for you, Macken.

Is it ethical to pursue mortgage loans from multiple lenders? I am doing it now because I am not sure that all brokers are equally competent at arguing my case. The rates are a little different too, of course, but it is really the fear of not landing a mortgage while I already have a closing date, that propels me.

It does not appear that I have to pay anything and am not obligated even after I fill out a 1003 loan application. Am I missing something? If I get turned down for the loan then my broker certainly does not feel that he has to compensate me, but I feel bad that one of the guys I am talking with will do a bunch of work and get nothing.

This must come up.

E

 

[bigler]

As I understand it, it is fine to pursue different mortgage loans as long as you don't let them check your credit, ie get pre approved by more than one. Each time they check your credit, it leaves a smear and lowers your overall credit score. I have a friend whose credit rating went from 790 to mid 500's after getting pre-approved by several different companies....

Cheers

 

[UI2003]

I'll tell ya what's un-ethical: that we as the consumer are penalized for shopping around for a decent mortgage rate (read: they drop yer FICO score by a few points everytime a lender views it). Here's what you do based off the advice of a friend who recently bought a home: Pick *three* lenders that you trust and then just go with one offer. I chose my local bank, Bank of America and my home-town bank - just due to familiarity. Lenders know there will be a certain amount of "scut" work when it comes to applicants but they're counting on that one True Buy to make it all worthwhile. Don't worry about shopping around - just don't go crazy with it 😉

 

[dr.evil]

I have no financial connection with Bank of American but I did obtain the Loans for Physicians from them to purchase my home. They did require that you have premier banking but do not require that you have $100,000 in assets like they usually do to become a premier banking memeber. They kind of "grandfather" you into the premier banking program as long as you open a checking account with them and are a physician. It really rocks.

The big thing that will get you "smacked down" from the Bank of America program is a low or even medium credit score. I can't remember their exact number but it's something around 720 or 740. That's where my friends got screwed.

And BTW, I have yet to meet a bank who counts your student loans in deferrment as debt. I could be wrong though.

For income, they use your contract with your future residency program.

 

[GeneralTso]

Originally posted by dr.evil
I have no financial connection with Bank of American but I did obtain the Loans for Physicians from them to purchase my home. They did require that you have premier banking but do not require that you have $100,000 in assets like they usually do to become a premier banking memeber. They kind of "grandfather" you into the premier banking program as long as you open a checking account with them and are a physician. It really rocks.

The big thing that will get you "smacked down" from the Bank of America program is a low or even medium credit score. I can't remember their exact number but it's something around 720 or 740. That's where my friends got screwed.

And BTW, I have yet to meet a bank who counts your student loans in deferrment as debt. I could be wrong though.

For income, they use your contract with your future residency program.

Jeez a FICO of 720-740 is pristine to near pristine. Mid 600s would be a low to medium credit score.

 

[UI2003]

The premier program is only for scores of 720 or better (less than 1% of ppl with that score default on a loan, says FICO) but they *do* offer lesser programs in case you
a) don't qualify under the score thingie or
b) the state you're moving too doesn't have a bank of america branch.

Happy hunting!

 

[Macken]

Originally posted by Eli T
Here is a question for you, Macken.

Is it ethical to pursue mortgage loans from multiple lenders? I am doing it now because I am not sure that all brokers are equally competent at arguing my case. The rates are a little different too, of course, but it is really the fear of not landing a mortgage while I already have a closing date, that propels me.

It does not appear that I have to pay anything and am not obligated even after I fill out a 1003 loan application. Am I missing something? If I get turned down for the loan then my broker certainly does not feel that he has to compensate me, but I feel bad that one of the guys I am talking with will do a bunch of work and get nothing.

This must come up.

E

Yup, it comes up, all the time. Nope...it's not unethical at all. You'd be crazy not to try and find the best possible deal you can get. The only time it gets expensive is when each lender has to order their own credit report and wants the $$ from you upfront.

Don't feel bad about people doing work for nothing. Trust me...mortgage banking is set up so that individuals are VERY well compensated. Fallout is just considered the nature of the beast.

Remember that mortgage brokers make money off of origination fees, "garbage" fees, yield spread premiums, SRP, etc. They make so much money off unsuspecting consumers that they are more than paid back for the loans they process that never close.

Shop around....get yourself the best deal with a reputable lender and don't worry about it. Just be careful about having every lender order credit reports because too many inquiries will start dropping your FICO. Shop around for the best rate by phone, ask friends, co-workers for mortgage recommendations, and narrow it down.

Hope this helps...good luck

 

[Eli T]

Worried that too many folks were starting to look at my FICO scores, I asked a clearinghouse (Money Tree) to halt any new inquiries. The email I got in return was probably mass produced but still thourough and included:

"Because LendingTree's credit inquiry is considered a soft inquiry by the 3 major credit bureaus, the inquiry will not impact your credit score negatively."

They also directed me to www.myfico.com where I went to the FAQ section, http://www.myfico.com/myfico/CreditCentral/FactsFallacies.asp and read a slightly less strongly worded bit of information:

"Fallacy: My score will drop if I apply for new credit.

Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called "inquiries") will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score."

So, I guess if you are going to have your credit pulled my multiple folks, do it in a short time frame.

For me this is important because if we have any problems with the underwriting of the policy we are interested in, I am going to a No Doc policy. I'll need to have my good credit for that.

I am beginning to think that I am unnecessarily worried about this prospect as I am quite familiar at this point with the process of student loan deferment calculation and have my financial ducks in a row. It was just that one confident sounding broker scared the bejeesus out of me by talking about some "new" guidelines that made it impossible to not include deferred student loans.

I appreciate everyone's input.

Eli

 

[pickaname]

You might try physicianlender.com. They have a 103% and 100% program with credit scores of something like 680. I am talking with them and a couple of traditional people as well. We'll see what happens.
What do you think of lending tree?

Good luck

 

[Eli T]

We started to look at Lending Tree but the rates were not the best. Because we are closing pretty soon, we feel a little skittish about the prospect of having a national lender doing our mortgage, especially if they don't have a local office. If we have to talk more about student loans, I would rather speak in person than fax stuff.

A good comparison shopper is bankrate.com.

http://origin.bankrate.com/brm/default.asp

My neighbor is also pursuing a mortgage from a lender (not a broker mind you) because they have more flexibility in underwriting guidelines. I think that the company name is ING. The last rate she got was 4.25% on a 5/1 ARM with a paucity of closing costs. If you have the time, check it out.

Eli

 

[Eli T]

I should have added this to a previous post.

Two good resources are
Home Buying for Dummies
and
Mortgages for Dummies.

Eli