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Doctor Loan Mortgage Programs

Discussion in 'Finance and Investment' started by germindian123, Mar 6, 2017.

  1. germindian123

    germindian123 perioaroundtheworld
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  2. InvestingDoc

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    I'm going through the process now for looking to buy a house and getting various lenders to compete with Fees. In the end I'm going to use a "doctor loan" because it takes out PMI since I don't have a 20% down payment. The drawback is that some of them have a lot of fees associated with originating the loans, so when you ask for rates also ask for fees so you can compare apples to apples. One company, I wont shame them publicly, but they gave me a great quote but then after 3 emails finally disclosed that they would have thousands in additional fees above the other quotes I was receiving. In the end, it ended up being more expensive for the amount of loan I am looking to take out.

    Many of the doctor loans that I am getting quotes on are for ARM and not 15 or 30 year fixed. I had to do a lot of searching to find companies who were willing to do fixed rate doctor loans in my neck of the woods.

    There are a lot of factors that go into buying a house, but asking interest rate from these loan providers is only half the story. Get fees from them too and start making a spreadsheet. You can get as many quotes as you want within 30 days and it only counts as one hard credit check. Good luck!
     
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  3. Smart Money MD

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    Be sure to read about points, and which companies present lower quotes without telling you about quotes. My house purchase moved rather quickly because there were multiple bids on the home, and I did not realize at the time my local lender was able to give me a "better" quote because I had purchased a point. Lesson learned.
     
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  4. fahimaz7

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    Anyone talked Wells Fargo into a doctors loan?
     
  5. Slack3r

    Slack3r Sicker than your average
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    Any experience with some of the lenders on that leverageRx? Looks like BoA is pretty universally loathed, but I haven't found much information on Fairway Loans or Northpoint.

    Anyone had any experience with these lenders?
     
  6. #LifeofaMedStudent

    #LifeofaMedStudent A VOICE for those in med training!

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    I've done a physician loan once for residency (would not generally recommend - read my outcome on lifeofamedstudent) but the process was super easy and my rate was equal to conventional. I'm going through the process a second time to transition into an attending, and again am getting rates equal or only a quarter point higher than conventional - just watch out for extra fees. But even though I could technically get enough cash together to do a conventional loan on a reasonable house - I like the idea of having that "down payment" at my disposal for continued time in the market, emergency fund, or whatever may arise. That to me is worth any small difference in rate/fees - as long as small.

    Disclaimer - several physician loan companies are paid sponsors of lifeofamedstudent.com. One of them I'm currently planning to use for my pending mortgage.
     
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  7. Neuronix

    Neuronix Total nerd
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    I second this. Doctor loans seem to be an advertising platform more than a great deal. You avoid PMI, but the interest rates are higher than conventional loans. Many want to push ARMs and don't actually offer 30-year fixed like we want. Meanwhile, everyone expects the interest rates to go up. It was like pulling teeth to get the lenders to disclose details of the loans without going through the whole process of getting pre-qualified.

    The lesson I learned after looking into doctor mortgages is just to go ahead and get a 20% downpayment like everyone else so I can least finance on equal footing.
     
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  8. fahimaz7

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    Could do a 10/1 ARM (3.5% atm) and just get aggressive at paying it off. After 10 years one should have enough equity in the home to refinance it without a problem. If rates are high at that time, just double down and pay the house off quick...
     
  9. abolt18

    abolt18 I regret nothing. The end.
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    Midland States Bank offered me by far the lowest rates and fees. I'm still in the purchasing process so I'll let you know how it goes.

    So far though, they've been great. Interest rate is locked into a 3.375% on a 7/1ARM.
     
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    #9 abolt18, Apr 12, 2017
    Last edited: Apr 23, 2017
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  10. Unforgettable

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    We are also in the process of buying using physician mortgage loan. Midland is offering very competitive rates for ARMs but we are working with Suntrust for a 30 year fixed and a rather competitive interest rate. But, we may have to switch to Midland since Suntrust is moving waaaaaaaaay tooo slow which is very frustrating.
     
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  11. Neuronix

    Neuronix Total nerd
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    Trying to get a physician mortgage again.

    So much bait and switch.

    Low teaser rates that turn out not to be true.

    Percent downs that turn out not to be true.

    Fun fun fun :barf:
     
  12. sazerac

    sazerac rye sense of humor
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    That was my experience recently (Spring 2017) too. Explored getting financing via a physician loan, and these unicorn 2% down 2% interest rate loans all seem to evaporate when it is time for the bank's pen to hit the paper. Talk is cheap.

    Finally just went with a tiny local bank that was willing to write a Jumbo 30 year fixed loan 10% down, <4% rate, 0% PMI, and 100% less BS. Since it was a local bank they could play a little fast and loose with the financing / qualifications since they planned to keep the loan in-house and it didn't need to be derivative-ready.
     
  13. smq123

    smq123 John William Waterhouse
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    Several posts in this thread violate the terms of service for this message board and have been removed. This board is for informational purposes, NOT advertising. See below from the sticky threads.

    Don'ts:


    • SDN bans all users that post in this forum to advertise a product, service, website, etc. There is no point in registering to post ads in this forum; they will be erased. If you want to advertise your products, go to the Free Classifieds section of the forums.

    • Posting advice with recommendations to use your web site is considered advertising. Operation of the SDN Forums is expensive; please have the courtesy to support SDN by paying for your advertising. If you wish to advertise, go to: Google AdWords Google AdWords advertising is inexpensive and effective.

    • Do not leave names of referring bankers, brokers, etc in your post. WARNING: If you are a regular poster the names will be removed, if you are only posting to advertise you will be banned. If you are interested in the information of a person who comes highly recommended from a post, feel free to PM the original poster to get the information. Those of you who would be willing to share information on resources via PM, feel free to state so in your post.
     
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  14. HopelessBias

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    Anyone with any knowledge of occupancy requirements on these types of loans?
     
  15. medicaldoctorloan

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    In reading some of the experiences you all are having with mortgages, it sounds pretty disappointing. Banks should offer the doctor loan in order to assist you in getting financing that meets your needs, such as not counting student debt against you or counting upcoming income for qualification. Banks also want a relationship with you and if you are experiencing untrue advertising, you probably are not likely to want a relationship. In looking around at several websites that advertise special financing for doctors, it seems like you will be able to quickly find several lenders to contact. Sounds like transparency and honesty may be the first thing you want to look for.
     
  16. medicaldoctorloan

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    Cant speak for all loans, but typically owner occupied.
     
  17. The White Coat Investor

    The White Coat Investor Practicing Doc and Blogger
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    You have to occupy the property. Nobody does doctor loans for investment properties.

    Not sure if anyone has linked here yet, but I think it's a pretty good compilation of what a doctor loan is and isn't and who offers them:

    Use Google. It'll pop right up. I think readers of this forum are already aware of my website though.
     
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    #17 The White Coat Investor, Jun 28, 2017
    Last edited by a moderator: Jul 26, 2017
  18. The White Coat Investor

    The White Coat Investor Practicing Doc and Blogger
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    Right, there is no free lunch. My website advertises lots of doctor lenders but I used a conventional loan for the two homes I've owned as an attending. But if you have a better use for your money than a downpayment (maxing out retirement accounts, paying off high interest student loans etc) they can make sense.
     
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  19. Senior Loan Officer

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    In my experience Bank of America and Suntrust offer the best rates/terms on their Doctor Loans, and BMO Harris offers the most flexible financing guidelines (for self employed doctors for example). Many other banks offer this product, but these three banks are the ones I would recommend based on a great deal of experience. Background: I have helped over 200 Doctors obtain financing through Doctor Loans.

    If anyone would like a referral to a loan officer at any of those three companies then please send me a PM, I would be happy to help you. I would also be happy to help answer any general questions about Doctor loans or mortgage terms that you have been offered.
     
  20. Neuronix

    Neuronix Total nerd
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    My experience was that these mortgage brokers straight up lie. When I put in an offer on a place, the three potential banks all changed the terms they had told me. Higher rates (like .5% or more!), more down than advertised, we'll match the other banks (lie), etc.

    It's one thing to get less favorable terms. It's another to be lied to. "oh the rates have changed", what 1% in a week?! You knew exactly what I was going to offer on. "Oh your county is special" -- but you knew where I was looking to buy! "You can buy down with points" -- what money to buy down? I need a physician loan because I don't have a big down payment! Why didn't you tell me about points before the offer? Or the 5% more down? Or that the rates were a lie? Blech.

    One thing is for sure, there are big commissions for referrals. It's just like disability insurance. Plenty of pushers, plenty of lies, plenty of devil in the details.
     
  21. Information Underload

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    Midland Bank had great rates in January. They have become very unreasonable with them as of August 2017, having increased them around 1.5% across the board. At this point, Bank of America beat them handedly. I got a 4.015% jumbo loan with 10% down with BOA v. a 5.50% loan from Midland. They really had great rates not too long ago.

    A local bank also appears to be willing to underbid Bank of America with me, though this is not finalized, so I'm not giving that rate, yet.
     
    #21 Information Underload, Aug 8, 2017
    Last edited: Aug 12, 2017
  22. Information Underload

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    New update: US Bank is offering 3.625% at Par for a 30-year fixed jumbo loan with 10% down and no PMI. Origination fees have been $770, which have quite low. WE have locked in this rate at this point. They were definitely better than Bank of America, though require more down and 6-months of reserves. APR comes out to 3.639%. We will be using them, and they have been moving fairly quickly and have been upfront about their demands (e.g., requirement to purchase lender title insurance). They were more somewhat slow to issue a pre-approval letter--much slower than BOA.

    This rate is better than what is offered through zillow and also through local banks. APR is comparable to PenFed's 20-year fixed.
     
    #22 Information Underload, Aug 14, 2017
    Last edited: Aug 26, 2017
  23. Justin Woodbury

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    I'll share an industry secret with you guys. Most Americans refinance every 3-5 years. Lenders take advantage of this sometimes by selling you loan programs that might not fit in with your goals. If you take a loan with PMI now and are locked in to that PMI, you may want to refinance down the road to get out of it. Usually the conventional loan ends up making the most sense. You will have PMI at first until you have over 20% equity, but that PMI can drop off without a refinance once you have paid it down to 80% loan to value. Just make sure you aren't going to refinance again in 4 years adding thousands more in cost. I don't you guys spending a dollar to save a nickel here.

    It also depends on your goals, and be realistic here. Thinking about buying another home for investment, or for vacation in big bear? Many borrowers will use their built up equity in their primary residence with a cash out refinance for their down payment. You can take advantage of a relatively low interest rate and leverage your assets to work harder for you. This way you dont need to pull money out of your 401k that is probably earning double digit percentage points.

    Also, home ownership can be time consuming so make sure its worth the trouble and this is an area you would want to own. If you end up moving across the country soon, sure you can sell the place or rent it. But what if property values have decreased? Do you really want to be stuck managing a rental property from five state away? Goals sometimes change.

    In either case, once you are ready, find a good, honest broker that can shop the market for you. I have worked at several large box lenders and every time their interest rates/fees are higher for a comparable loan through a broker. These large companies just have too many six figure salaries to pay to offer anything lower. The broker will also be able to find you a lender that can close fast, which is why most purchase loans are done through them. If you just bought a home, do you really want to wait 4 months to get the keys (in some cases being forced to rent the home you just sold for thousands each month) in order to move in? No sir!

    Cheers!
     
  24. AntonyRibo

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    >>In the end I'm going to use a "doctor loan" because it takes out PMI since I don't have a 20% down payment

    Strong plus!
     
  25. Sahd

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    My wife and I took advantage of this program in March of 2015 to get our "dream home". I was extremely skeptical of the program, and assumed it would be 'too good to be true'. I was quite shocked to be wrong.

    For reference we obtained a Jumbo loan at 3.5% 30 year fixed with 5% down, no PMI, no hidden fees (we had to switch our checking from Chase to this 5/3 to get from 3.65 to 3.5) and the origination fees were very cheap. Even compared to other traditional loans I shopped around at 20% down without using the Physician loan program this exceeded them in every way I could measure. If anyone wishes to PM me I could refer you to who I worked with and she could likely find someone in your state to help out if you would like to explore this option.

    That said, I would NOT encourage anyone to pursue getting a PL let alone any other mortgage until you feel you have found employment you would be happy at for the considerable future.
     
  26. Atlas1496

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    Have y'all seen any loan programs that offer a 0% down? I will not have much money to work with in between the time I graduate and start earning a paycheck.
     
  27. BigRedBeta

    BigRedBeta Why am I in a handbasket?
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    Fifth Third will finance you 100%

    I went through them for our doctor's mortgage, good experience overall and I'd recommend them, but in retrospect we would have been far better off waiting and saving for a down payment. Our financial situation was overall pretty miserable though, so we did what seemed the best with the information we had. But we had just paid for a wedding, gotten pregnant immediately, were moving half way across the country, would have lost all the equity my wife had in her condo to closing costs if we sold it at the moment and both had significant credit card debt. The crush of needing more space with a baby on the way and a backyard for the dog pushed us to go for the house before we should have.

    I've done enough self-flagellation for my financial sins and we've managed to pay off our credit card debt, the condo has a better valuation plus a few years of additional equity built up, and we love our house and our neighbors...but it still would have been better to gone in with a down payment, even if it was just 10%, since most of the doctor's mortgage programs don't require PMI.
     
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  28. Neuronix

    Neuronix Total nerd
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    I'd recommend waiting until you have a downpayment. Some places will finance you 100% but the rates suck.
     
  29. LeverageRx

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    There are several lenders that have extremely aggressive interest rates at 100% financing and are very comparable to what you would get with a conventional mortgage. SunTrust is one of the most aggressively priced lenders in that space right now.
     
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  30. abolt18

    abolt18 I regret nothing. The end.
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    What to you is a bad rate? I got 3.375 with 100% financing. 7/1 ARM. I believe the offered rate for 5/1 ARM was 3.125. To me, those are pretty excellent rates.

    I'm in a 4 yr residency and to me the 7/1 gave me a little more security of locking in rates before I move, as I completely anticipate the need to move when we're done because my wife and I want to move closer to home. But, if we stick around here for a couple years or we can't sell the house when we want to, our interest rates won't skyrocket in the immediate future.

    I have a number of friends who got very similar rates on loans from another bank actually. So they rates don't "all suck", but you definitely have to look more aggressively.
     
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  31. Neuronix

    Neuronix Total nerd
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    I forgot about ARMs. Everyone expects rates to rise. Interest rates are already rising. So that's just a lousy bet. I didn't want to be stuck with an exploding mortgage.

    I wanted 30 year fixed--only could get a decent rate with 15% down.

    Also I don't think that buying planning to own for only 4 years is a great deal, especially in such a high market, but that's just my opinion.
     
  32. Raryn

    Raryn Infernal Internist / Enigmatic Endocrinologist
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    I don't quite understand the hurry here. If you have no money and you're just graduating... rent for a year and build up a small down payment and an emergency fund. What are you going to do if you move in to your new house with zero funds available and the AC breaks the next day?
     
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  33. FlowRate

    Physician 10+ Year Member

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    Slightly off-topic, but where do people usually stash the money they save up for a first down payment? Savings account? Sucks to have all that cash doing nothing.
     
  34. Raryn

    Raryn Infernal Internist / Enigmatic Endocrinologist
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    Many savings accounts these days are paying ~1.5%.

    If you know you won't need the money for more than 12 months, CDs are also an option (somewhere around ~2%, but vary widely).

    Bond funds have taken a beating in this increasing rate environment so I personally wouldn't put my down payment in one. Stocks of course have the highest potential for growth... but too risky for that IMO.
     
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  35. gasblaster

    gasblaster ASA Member
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    Not necessarily regarding the Physician Home Loans, but I've been reading about the Case-Shiller Index and wondering what are people's thoughts about this being a time to buy (assuming you have the money, plans to stay in current location, stable personal life, etc.).
     
  36. Raryn

    Raryn Infernal Internist / Enigmatic Endocrinologist
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    Highly metropolitan area dependent.
     
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  37. ortnakas

    ortnakas DO PGY-1
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    For those of you who have done this— what was your monthly payment like? Close to/above what it would have been had you had the 20% down plan?

    Matched AOA and finding that the city we’re headed to has reasonably priced homes for sale and less reasonably priced homes for rent. Already aware of the general pros and cons of physician loans, just can’t find this particular detail.
     
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  38. Raryn

    Raryn Infernal Internist / Enigmatic Endocrinologist
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    In addition, you can put the #s in Is It Better to Rent or Buy? and see what pops out. The problems are manyfold though with the assumptions you put into the calculator. The two biggest are:
    A) Presumed rate of growth of the housing price. If you make that high enough, it will say buy 100% of the time.
    B) Presumed rate of growth of your alternate investment(s)

    You can use Zillow to get a (crappy) estimate of A, and for B... just be conservative.
     
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  39. gasblaster

    gasblaster ASA Member
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    Thanks. I looked at this, and you're right, that there are several problems with it. Mainly a lot of it is trying to predict what the growth of real estate vs rent. Additionally, it assumes that there's a constant growth over that period of time, whereas it's not unreasonable to think that a recession (tbd to what degree) is coming.
     
  40. humblethinker

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    Is there close proximity to a major downtown area and proximity to public transportation?
     
  41. Mad Jack

    Mad Jack Critically Caring
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    I'm in a similar boat. Mortgages are half of rents and I could stand to save about $6,000 a year by owning.
     
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  42. Peruano

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    Can anyone give me a ballpark of about how much home someone can afford when using a doctor's loan when starting residency (<$200,000, $200,000-$250,000, >$250,000)? I'll be starting a 5 year residency in 2019 and will leave medical school with no debt thanks to a scholarship and a hardworking spouse. The spouse will no longer have an income during residency because they want to stay at home with kids once residency begins. I would like to have an idea so that I know what residency programs have homes near the hospital that I might be able to afford, and which don't, when figuring out what programs to apply to.
     
  43. Neuronix

    Neuronix Total nerd
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    Depends on how much of your income you want going into your property. A good rule of thumb is no more than 2-3x your annual income. So in your case assuming an income of $50,000/year, up to $150,000.
     
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  44. Peruano

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    I've seen that advice before. It doesn't get modified in any way if you have a certain salary now, but a practically guaranteed 5-6x that salary in 5-6 years?
     
  45. Neuronix

    Neuronix Total nerd
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    Sure you'll have a higher salary, but you also have a high probability of either moving for a job in a new location or upgrading whatever house you buy. You don't want to be tied down or in a bad situation on an ARM by a house that you can't afford assuming that you'll make X dollars in the future.

    For all of these reasons it's probably better to rent if that's a viable option in your location.
     
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  46. VA Hopeful Dr

    VA Hopeful Dr Senior Member
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    And that's 5 years of payments if you go for a more expensive house on a resident's salary.
     
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  47. NITRAS

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    Short term, owning is more expensive than renting. Long term own is going to be better, but there are lots of cases where it is better to rent.

    My wife and I rented for two years after residency. We thought me might move again (thinking about fellowship. . maybe moving closer to family yada yada). We rented inexpensively, stashed away cash, and made a different move than we would have if we had just come out of residency with about 30% down. You also never know what path your career is going to take. I'm also at peace that this house we have isn't going to be ours forever. It takes the stress off somewhat.

    When you have the big boy salary, you are going to move to another house. You should get the house/payment you can afford now. I would buy so that you have margin in your life cause **** happens. I'd want my payment to be no more than a quarter of my take home pay.

    These physician loans down't sound that appealing. . . . especially with that most loans can get rid of the PMI with just paying for an appraisal.
     
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  48. Mad Jack

    Mad Jack Critically Caring
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    I ended up buying, got a rate that's basically the same as going rates for a regular mortgage, and fully intend to keep this home as a rental post-residency.
     
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  49. TMP-SMX

    TMP-SMX Senior Member
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    Somewhere to stash your money is important to improve your ability to save monthly until the 20% down is saved up (set a certain amount for month from your paycheck into a high yield savings account). This isn't a great money maker but it forces you to save and not spend the money. An alternative once the emergency fund is built is to open a short term CD to build a little bit more interest while waiting. I researched which ones seem reliable/financial rating and have a decent website/app. I use Live Oak Bank.

    ARM are attractive now but all you need to do is look at historical rates and the fact that we have already hit bottom to know that conventional loan are likely a better deal over the longer term. It's not a great idea to buy your long term house straight after residency. The best terms are going to be once your credit is better (longer term paying off debt and building credit). Ideally one would put down the standard 20% to avoid PMI and get a 15 year loan that way equity builds faster. A 30 year is fine as well but if home prices are high it ends up costing a lot more for that home.
     
  50. CDI

    CDI Senior Member
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    I’m slowing/holding off now unless I see something awesome or someone desparate. During residency, I bought two properties at 5% down w/ 30 yr fixed and 5/1 ARM - in a Top 3 Case-Shiller Index city. The first is cash-flowing (ROO is ike 500% on that down payment due to appreciation) as a rental, the other unit is breaking even. With my attending contract, my income goes up 5x, so I was approved easily well into the 7 figures at 3.5% 5/5 ARM. I passed. We are now moving to a HCOL area likely long-term. Rents aren’t cutting it. Initial plan is to open HELOC on current place, lease when we move (2x our current payments) and save extra for either investing out of state if market dips or for a larger down payment.
     

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