Deferment and mortgages

[peerie]

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I am looking into mortgages and have come across a good mortgage person. She is having a hard time comprehending the idea of deferment in terms of the mortgage and debt/income ratio.

Despite explaining this to her many times, she still feels that the underwriter will freak when presented with this issue. I know, what can I say. We have to apply yearly for our deferments in residency because our contracts are given yearly. My loan holders say they have never seen an underwriter not accept this but the mortgage person is wigging out. She does not like the language that says: "resident will then be eligible to apply for further deferment at that time."

I don't want to look for someone all over again if I don't have to but honestly, have others run into this semantic mess and how have you overcome it? I am not worried and neither are my loan holders, she is just being a big pita (bread sandwich). 🙂

 

[SoCuteMD]

I am looking into mortgages and have come across a good mortgage person. She is having a hard time comprehending the idea of deferment in terms of the mortgage and debt/income ratio.

Despite explaining this to her many times, she still feels that the underwriter will freak when presented with this issue. I know, what can I say. We have to apply yearly for our deferments in residency because our contracts are given yearly. My loan holders say they have never seen an underwriter not accept this but the mortgage person is wigging out. She does not like the language that says: "resident will then be eligible to apply for further deferment at that time."

I don't want to look for someone all over again if I don't have to but honestly, have others run into this semantic mess and how have you overcome it? I am not worried and neither are my loan holders, she is just being a big pita (bread sandwich). 🙂

You need to find another mortgage broker, try asking people from your program who they have used.

Also, isn't the residency deferment ending on July 1, 2009? Meaning that those who have applied for deferral and received it will have it for another year, but it won't be renewable after that?

 

[dragonfly99]

I agree with looking for another mortgage broker.
However, from personal experience I can tell you that credit is really tight right now. I had trouble getting a loan and I'm a research fellow w/an IM residency already under my belt, getting ready to start a clinical fellowship. I had an underwriter demanding that he needed to see my first pay stub from my new fellowship before I could get a loan...luckily I got that requirement removed, but it's TOUGH out there in terms of mortgage financing right now. If you don't have a current job and 20% down, it's just tough out there.

 

[DonStracci]

Search around for another lender. It is incredibly difficult to get anyone to understand the residency loan forbearance option (there is no more deferment!!!). Compass Bank's physician loan program has turned out to be amazing, however.

It is way more difficult to get a mortgage than it was 13 years ago (our first home) or 6 years ago (home #2). At first I thought it had to do with my loan debt, but I came to realize it's not just that.\

Moving, in general, is an awful process...

 

[Miami_med]

I am looking into mortgages and have come across a good mortgage person. She is having a hard time comprehending the idea of deferment in terms of the mortgage and debt/income ratio.

Despite explaining this to her many times, she still feels that the underwriter will freak when presented with this issue. I know, what can I say. We have to apply yearly for our deferments in residency because our contracts are given yearly. My loan holders say they have never seen an underwriter not accept this but the mortgage person is wigging out. She does not like the language that says: "resident will then be eligible to apply for further deferment at that time."

I don't want to look for someone all over again if I don't have to but honestly, have others run into this semantic mess and how have you overcome it? I am not worried and neither are my loan holders, she is just being a big pita (bread sandwich). 🙂

You don't need a broker at all. You can go straight to a bank. Bank of America offered me a mortgage with all of your issues. Here's what I had to do. I gave them a letter from my financial aid office stating that all of my loans were federal and eligible for deferment or forebearance for atleast a year. I also needed to give them a copy of my residency contract with my stated salary for the next year with the signitures from the hospital. They also need proof of my graduation from medical school. The underwriter accepted this instantly with no issues at a 5% interest rate (slightly above market at this point, but it was FHA and the difference per month was minimal).

Now, is your issue that you are trying to buy a house, or is your issue that you're trying to refinance a mortgage from medical school?

If you are trying to buy, credit is tight by the standards of 2 years ago, but it is readily available if you represent a low credit-risk. Me and my wife both have 700+ FICO scores, with credit reports including previous 5 figure payoffs. We had 3.5% to put down, and we have sufficient funds available to cover all closing costs. If you are a similar credit risk, then I can tell you that there are lenders willing to loan to you outside of any physician loan program, and you simply need to find a better broker.

 

[John Deere Gree]

You don't need a broker at all. You can go straight to a bank. Bank of America offered me a mortgage with all of your issues. Here's what I had to do. I gave them a letter from my financial aid office stating that all of my loans were federal and eligible for deferment or forebearance for atleast a year. I also needed to give them a copy of my residency contract with my stated salary for the next year with the signitures from the hospital. They also need proof of my graduation from medical school. The underwriter accepted this instantly with no issues at a 5% interest rate (slightly above market at this point, but it was FHA and the difference per month was minimal).

Now, is your issue that you are trying to buy a house, or is your issue that you're trying to refinance a mortgage from medical school?

If you are trying to buy, credit is tight by the standards of 2 years ago, but it is readily available if you represent a low credit-risk. Me and my wife both have 700+ FICO scores, with credit reports including previous 5 figure payoffs. We had 3.5% to put down, and we have sufficient funds available to cover all closing costs. If you are a similar credit risk, then I can tell you that there are lenders willing to loan to you outside of any physician loan program, and you simply need to find a better broker.

+1

Mortgage lender just wanted something stating that my loans would be in deferment/forbearance for one year. I got my financial aid adviser to write a letter and it worked. Had to send in other documents like Drivers ID, SSN, etc to prove I am who I say I am.

Got a FHA loan at lower interest rate than the previous poster, and will close on the house early next month. If you want to buy a house, you seriously need to find someone else. It can be done. I went with a small bank in the city where I'm headed.

 

[dragonfly99]

I agree with trying a local bank or credit union. That is how I got my loan...this was when a mortgage broker was telling me he didn't think he could find me any loan. Not sure why, but some of the banks/credit unions seem more willing to work directly w/me, vs. mortgage brokers who perhaps don't understand the residency thing, and/or the commission on a 150k loan just may not be worth their while.

 

[peerie]

Good points, all. Thank you for the advice and tips! Well, I have spoken to the lenders and will have the documentation in hand by the end of this month. For the residency deferral it can only be done 30 days before the start date. This is a federal guideline for all lenders. So, once I have that approval in hand she will be able to pre-approve me.

I may also call some of the local banks and see how they respond. This woman is like the fourth or fifth person/place I tried and so far she seems the best. Part of the problem is that I am trying to do this long distance and so I am still trying to figure out the local banks, get through to the right person or department, etc.

It will be a FHA loan with a sweet, tight little interest rate. Yeah! I think she might work out after all but still - jeesh! - it has been a big pain. One thing I learned talking to all my lenders is the interest that will accrue with my deferral: about 7500 per year. I was advice to try and pay as much of this as I could during residency so that when I am done I will not then have added another 25K in compounding interest to the total of my loans.

I am a frugal mouse and so I thought I would try and do that as much as I can by paying a certain amount of the payments per month. There can be a strategy with loans, interest accrual and future payments and I just starting to figure it out. Thanks everybody for the awesome suggestions on the mortgage.

 

[Ariee]

+1

Mortgage lender just wanted something stating that my loans would be in deferment/forbearance for one year. I got my financial aid adviser to write a letter and it worked. Had to send in other documents like Drivers ID, SSN, etc to prove I am who I say I am.

Got a FHA loan at lower interest rate than the previous poster, and will close on the house early next month. If you want to buy a house, you seriously need to find someone else. It can be done. I went with a small bank in the city where I'm headed.

Hi,

How did you get the FHA? I thought they needed a pay stub? Could you please pm me the name of the bank as well as any details. My husband found the house of our dreams, he's goign to be a resident next yr, I start July 2010 and excuse my french but the SOB at the mortgage company took our application fee, wasted our time, told us we had it, then told us the market is declining=BS! We're looking at the FHA now, but we thought u needed a pay stub before you could get it? Well we don't have one, when u go from scut monkey to residency, you can't work...why don't ppl understand logic?

 

[Ariee]

Btw, let me clarify when I said house of our dreams, I meant the house of our dreams coming out of medical school and beginning residency dreams, folks...this little house is less than 200K (which is reasonable for a first house, I mean on HGTV, there's first-time home buyers who're like teachers and cops spending 400-500K), so it's not like we're spending big money in comparison to the aforementioned. But still, this mortgage guy needs to be castrated for real. We did everything right and he SCREWED us!

I'm just tired of this darn game. I mean 4 yrs of undergard, 4 yrs college, 4 yrs medical schoo, 4yrs residency and we still can't mortgage a house. 👎thumbdown👎thumbdown👎thumbdown👎thumbdown👎thumbdown (I'm only ltd to 10 images, there'd be more of these, trust me)

I'M LIVID!

 

[Miami_med]

Hi,

How did you get the FHA? I thought they needed a pay stub? Could you please pm me the name of the bank as well as any details. My husband found the house of our dreams, he's goign to be a resident next yr, I start July 2010 and excuse my french but the SOB at the mortgage company took our application fee, wasted our time, told us we had it, then told us the market is declining=BS! We're looking at the FHA now, but we thought u needed a pay stub before you could get it? Well we don't have one, when u go from scut monkey to residency, you can't work...why don't ppl understand logic?

I went with Bank of America, which leads me to believe that you could probably find a number of large banks. My signed contract with a salary and first pay date with enough money in the bank to cover the interim was sufficient. I will tell everyone this again:

DO NOT GO WITH A MORTGAGE BROKER UNLESS YOU HAVE TO. Banks are happy to lend to you themselves, and whatever pains the broker is going to go through or going to be compensated from somewhere (probably by you). The bank is also going to be better able to know its policies for atypical applicants than the broker will.

Your market very well may be declining, and that may impact what they will lend you, though this will occur after an assesment. I had to renegotiate my purchase price down a couple of thousand bucks after my asessment came in a bit lower than our initial contract. The declining market thing should impact the amount instead of your ability to actually get a loan.

 

[Miami_med]

To Peerie:

I am also moving to an entirely new region of the country, and I was simply transferred to the B of A office that serviced that region. There was no problem with this. Also, you can pay whatever interest you want on in deferment loans. The bank just wants to know that you can not pay them, so that you don't end up in a position where your monthly bills are too high to comfortably pay the mortgage. If you can keep your interest under control in residency, more power to you. It's a good choice.

 

[DonStracci]

There's no reason to go with a local bank. Find whatever bank will give you the best rate regardless of their location. It can all be done by Fedex and email and phone. We've not had any problems doing this.

 

[John Deere Gree]

There's no reason to go with a local bank. Find whatever bank will give you the best rate regardless of their location. It can all be done by Fedex and email and phone. We've not had any problems doing this.

I agree...the only reason why I state a "local" bank is that it's not a big well known bank (i.e. BOA, Wells Fargo, etc) and that even these "smaller" banks are willing to work with you.

I did everything via e-mail and made one or two calls to the bank to verify a few things, but it can easily be done.

 

[dragonfly99]

I think what he was getting at is that sometimes local banks or credit unions are easier to get a loan from vs. a mortgage broker. This is particularly true if they see a signed contract from a hospital/med system they are familiar with. I went to a local credit union and was able to get a FHA loan. My real estate agent then suggested I try a mortgage broker she knew...this person told me that he'd contacted multiple banks and the underwriters all said that they couldn't lend to me without a pay stub from the new job. I said, "That's funny b/c I already got preapproved for a loan by XXX Credit Union here in town". Sometimes if one lender and/or mortgage broker isn't doing the job, you just need to move on to the next one.

I've heard multiple stories this year like the one above (lender at first agrees to the loan/prequalifies the person, then backs out). I do think credit is very tight right now and it's not really easy for graduating med students and even house staff to get a mortgage right now. I made 60k last year, counting moonlighting money, and have 800+ FICO score and I had a heck of a time getting a loan.

 

[John Deere Gree]

Hi,

How did you get the FHA?

I talked to a local banker, submitted everything they wanted, and was approved.

I thought they needed a pay stub?

They asked me for my resident contract (signed) to prove I'd be making as much as I said I'd make. They also wanted paystubs from my wife, but later did not include them since she will be a stay at home mom.

Could you please pm me the name of the bank as well as any details. My husband found the house of our dreams, he's goign to be a resident next yr, I start July 2010 and excuse my french but the SOB at the mortgage company took our application fee, wasted our time, told us we had it, then told us the market is declining=BS!

You actually paid someone upfront? We pay the bank an origination fee (percentage) based on whatever we pay for our house. We close on our house in June and have yet to pay anyone anything. The name of my bank doesn't matter since local banks and big national banks will work with you.

We're looking at the FHA now, but we thought u needed a pay stub before you could get it? Well we don't have one, when u go from scut monkey to residency, you can't work...why don't ppl understand logic?

See above...my residency contract worked for them.

I'm sure you've explained to them your situation, but the simple way to solve your problem was to get uninvolved with whomever you spoke with (I know hindsight is 20/20). There are banks out there that will work with you, and many people on here have given great suggestions on where to look.

Btw, let me clarify when I said house of our dreams, I meant the house of our dreams coming out of medical school and beginning residency dreams, folks...this little house is less than 200K (which is reasonable for a first house, I mean on HGTV, there's first-time home buyers who're like teachers and cops spending 400-500K), so it's not like we're spending big money in comparison to the aforementioned. But still, this mortgage guy needs to be castrated for real. We did everything right and he SCREWED us!
I'm just tired of this darn game. I mean 4 yrs of undergard, 4 yrs college, 4 yrs medical schoo, 4yrs residency and we still can't mortgage a house.
I'M LIVID!

I can somewhat feel your pain. We drove 16 hours round trip to look at houses, found one that we made on offer on that had only been on the market for two days. Our Realtor (who represented the seller also), said she'd meet with the seller that afternoon after he got off work to go over the offer. We thought we'd have the house. Get a call about a half hour before they were to meet and was told that a second offer was coming through. Ended up getting outbid due to minor things, both offers were equal moneywise. So I had to go back the following week (took a plane flight this time), and looked at more houses and got the house we'll call home. If only she could have met with the seller earlier in the day...

Sorry I didn't PM you this message but there are many out there that have the same questions as you.

 

[peerie]

I made 60k last year, counting moonlighting money, and have 800+ FICO score and I had a heck of a time getting a loan.

Ok, great.

No, seriously this is a big freakin' pain as well as kind of scary. I think the broker is full of it and looking after her own asp 🙂)), and I will call around on Monday and see what I can find in the local banks. On the other hand, this woman has a good reputation and has apparently done alot of work with my broker who also seems to have a sterling reputation. I like the broker and so - I guess I could try and have some faith this will all work out but my inner cynic is restless and on guard.

Lots of options, I will try them one by one and see what works out best. I would prefer a local bank and not a BoA, the big banks seem to like to pad the bills with extra charges or higher rates. We'll see what happens. Really stressful!!

 

[NotAProgDirector]

I can somewhat feel your pain. We drove 16 hours round trip to look at houses, found one that we made on offer on that had only been on the market for two days. Our Realtor (who represented the seller also), said she'd meet with the seller that afternoon after he got off work to go over the offer. We thought we'd have the house. Get a call about a half hour before they were to meet and was told that a second offer was coming through. Ended up getting outbid due to minor things, both offers were equal moneywise. So I had to go back the following week (took a plane flight this time), and looked at more houses and got the house we'll call home. If only she could have met with the seller earlier in the day...

The realtor probably knew there was someone else interested in the property, and purposely delayed to create a bidding war and increase the price. Realtors work for the seller, not for the buyer. Never forget that. They are not your friend (unless you are selling a house)

 

[dragonfly99]

It is better to get a realtor who represents you, not a "dual agent" who is also representing the seller of the house/condo you are trying to buy, IMHO.

Peerie, the mortgage broker may very well be honest, and generally good. Some just don't know a lot about the resident/fellow type of situation. I don't know about it if you are still a med student, but if currently house staff I think you should be able to get an FHA loan from someone...need 3.5% down payment for that, though.

If you get desperate, could try physicianloans. I would try a few local credit unions and banks where you are planning to move first, though. Do you have any money to put down? Are you buying in a declining market?

 

[John Deere Gree]

The realtor probably knew there was someone else interested in the property, and purposely delayed to create a bidding war and increase the price. Realtors work for the seller, not for the buyer. Never forget that. They are not your friend (unless you are selling a house)

It is better to get a realtor who represents you, not a "dual agent" who is also representing the seller of the house/condo you are trying to buy, IMHO.

Agree, and we knew that when we made the offer. We also were expecting full price counter offer since she knew our situation. The Realtor needs to make money somehow, and I don't blame her one bit for what happened.

Here's the more detailed version for anyone who cares. We looked at the house the first day (Monday) it was on the market and didn't really think much of it. We said we'd put it on our list, and went back to look at it a second time the following day. After looking at the other two houses we were interested in, this house was much better. We still wanted to talk about it without the Realtor present, and called her up that evening saying we would make an offer on the house. We met the following day (Wednesday) and filled out all the offer paperwork, and headed home. We got the news about 2 hours before we made it home. What sucked the most was that we knew one of us would have to go back by ourselves to find the house since the other two houses we made a second look would be too costly to upkeep. We were just surprised that in "today's" market houses would sell that fast, but they did.

Oh well, you live and learn.

 

[SoCuteMD]

It is better to get a realtor who represents you, not a "dual agent" who is also representing the seller of the house/condo you are trying to buy, IMHO.

Peerie, the mortgage broker may very well be honest, and generally good. Some just don't know a lot about the resident/fellow type of situation. I don't know about it if you are still a med student, but if currently house staff I think you should be able to get an FHA loan from someone...need 3.5% down payment for that, though.

If you get desperate, could try physicianloans. I would try a few local credit unions and banks where you are planning to move first, though. Do you have any money to put down? Are you buying in a declining market?

IME, having a dual agent can be a double-edged sword. I had two offers on the place I'm selling - one from a buyer who came to the place through my broker and one who came independently. They were pretty equal, but we initially decided to go with the one that came through our broker even though it was a little bit less. Why? Because we knew she'd work harder to make the sale happen if she was looking at 2x the commission.

Agree, and we knew that when we made the offer. We also were expecting full price counter offer since she knew our situation. The Realtor needs to make money somehow, and I don't blame her one bit for what happened.

Here's the more detailed version for anyone who cares. We looked at the house the first day (Monday) it was on the market and didn't really think much of it. We said we'd put it on our list, and went back to look at it a second time the following day. After looking at the other two houses we were interested in, this house was much better. We still wanted to talk about it without the Realtor present, and called her up that evening saying we would make an offer on the house. We met the following day (Wednesday) and filled out all the offer paperwork, and headed home. We got the news about 2 hours before we made it home. What sucked the most was that we knew one of us would have to go back by ourselves to find the house since the other two houses we made a second look would be too costly to upkeep. We were just surprised that in "today's" market houses would sell that fast, but they did.

Oh well, you live and learn.

Actually, I wouldn't be surprised if the next quarter's numbers show that home sales are on a strong upward trend. There is incredibly strong incentive to buy (tax credits, low mortgage rates) and many people feel that the market has hit or is very close to bottom. This obviously varies geographically...I'm sure the market in Detroit is still on a downward trend.

 

[gutonc]

Actually, I wouldn't be surprised if the next quarter's numbers show that home sales are on a strong upward trend. There is incredibly strong incentive to buy (tax credits, low mortgage rates) and many people feel that the market has hit or is very close to bottom. This obviously varies geographically...I'm sure the market in Detroit is still on a downward trend.

Totally OT but I think the market still has another quarter or two headed down, albeit at a somewhat slower rate. You're right that there are a lot of incentives (particularly for first-time buyers) out there right now but the unemployment rate continues to rise, making many people a little more hesitant (or completely unable) to enter the market right now. I think it will take a turnaround in employment #s before the real estate market really starts it's rebound.

Personally, I'm hoping it takes another year or so to hit bottom because that's when I think we'll be ready to buy!

 

[peerie]

Hi DFly99,

I am a new grad and will start residency in a few weeks.

I am looking at the FHA and it should be a good interest rate, and I thought the overall costs looked pretty good. The charges are much less for a 15 year loan, the 30 year loans have a higher charge for the mortgage insurance per month, say $15 versus $50 on 100K. So that can make a better deal on the 15 year loan.

The FHA is still an awesome loan for new grads or other people with hardly any money to put down so these charges are ok. At least, they seem way better than a conventional loan and the fees traditionally hidden on those loans by the bank and the agent.


[I kind of like that, DFly99! Hope that was an ok nickname. It sounds better when you say it outloud. 🙂]

 

[DonStracci]

Here's the more detailed version for anyone who cares. We looked at the house the first day (Monday) it was on the market and didn't really think much of it. We said we'd put it on our list, and went back to look at it a second time the following day. After looking at the other two houses we were interested in, this house was much better. We still wanted to talk about it without the Realtor present, and called her up that evening saying we would make an offer on the house. We met the following day (Wednesday) and filled out all the offer paperwork, and headed home. We got the news about 2 hours before we made it home. What sucked the most was that we knew one of us would have to go back by ourselves to find the house since the other two houses we made a second look would be too costly to upkeep. We were just surprised that in "today's" market houses would sell that fast, but they did.

Oh well, you live and learn.

Oh my goodness how horrible!!!!! We had to do the same thing- travel cross country to look at houses and make an offer. Then we couldn't make the "official" offer because we didn't bring the checkbook to have earnest money, and also there is an obscure form to be filled out by the lender, and it was the weekend. So we went home in limbo. We had a backup house, but I felt ill waiting for the offer to be official and the seller to respond.

I'm glad something worked out for you!

 

[SoCuteMD]

Totally OT but I think the market still has another quarter or two headed down, albeit at a somewhat slower rate. You're right that there are a lot of incentives (particularly for first-time buyers) out there right now but the unemployment rate continues to rise, making many people a little more hesitant (or completely unable) to enter the market right now. I think it will take a turnaround in employment #s before the real estate market really starts it's rebound.

Personally, I'm hoping it takes another year or so to hit bottom because that's when I think we'll be ready to buy!

Also OT - you and me both! 😀 I'd like to get back in, but need some time to make sure my current transaction is going to close before I do so!

I think you are right about unemployment. One of my friends lost her job today 🙁