"Doctor Loan/Physician Loan Programs"

[165808]

I just said it in another forum, but it also seems appropriate here. The max BofA Doctor Loans will preapprove you for with one intern's salary is $205k. More if you add in a spouse's income.

The BofA doctor loans do NOT take into account your school debt, that's the whole thing about it that makes it different. Otherwise we'd never qualify. But it's only the graduating med student's school debt it can ignore (if eligible for deferral). Any other debt that is NOT school loans is counted. My husband's law school debt is also factored in, which cancels out his current income basically.

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[RockfordWF]

Uh, I think they most definitely consider your debt, at least every lender I spoke with did, and that was about 7 different ones. Perhaps what you mean is they don't count deferred student loans against you which is generally true, but if you have other debt such as car loans, personal loans, credit card debt you can be sure they are counting that - how could they not? If they ran a credit check then they are considering your debt, that's why they run it. And if they didn't run a credit check then most likely you aren't truely pre-approved but rather pre-qualified, big difference.

I'm only referring to the loan debt.

I didn't consider the other debt, since most medical students don't have other debt (at least the smart ones, anyway.)

 

[165808]

And there most definitely are credit checks involved with the preapproval. The Bank of America doctor loans require a minimum credit score of 700 for the doctor-to-be or else no dice and no exceptions.

If anyone is curious, www.myfico.com offers a free trial so you can see your credit score in seconds. Just remember to cancel in a few weeks before they charge you

 

[bjackrian]

Is it possible to get a physician-type loan that's a 30 year fixed instead of an ARM? Next year, we'll be looking at having about 10-15% to put down and would like to get a 30 year fixed, but we would also like some of the physician loan advantages like not counting deferred student loan debt. Anyone know if this is possible?

 

[bjackrian]

Yup, they have a ton of different types at BofA. Here's the link to this lady's website that has more info: http://www.physicianmortgagespecialist.com/

I really feel like I should get a cut of the money for plugging them so much!! But they're the only company I know anything about, and we just did the conference call thing last week.

Thanks for the link!

Do you (or anyone else) no why they don't cover some states and/or if there are other similar lenders who do. I'm specifically looking at Colorado and Utah.

 

[165808]

Not a clue!! Sorry.

 

[randomedstudent]

Thanks for the link!

Do you (or anyone else) no why they don't cover some states and/or if there are other similar lenders who do. I'm specifically looking at Colorado and Utah.

B of A won't do a physician mortgage in states where they don't have an actual branch. The reason is (according to the BofA lender I spoke with) b/c these are not profitable mortgages for them and the only reason they do them is with the hope that they will build a solid relationship with a soon-to-be-high-earning physician and will recoup their "loss" with your future investments, etc. So, if there is no branch for you to go to, presumably you won't do your regular banking/investments with them (although I'm not sure how many people with BofA physician mortgages are doing that anyway....) They can still offer you traditional mortgages, some even with 100% financing but you will have to pay PMI, which IMO is not the end of the world IF the rate is much lower than what's offered by other lenders (for me it wasn't much lower so not worth paying the PMI in my case).

 

[DoctorWannaBe]

I just said it in another forum, but it also seems appropriate here. The max BofA Doctor Loans will preapprove you for with one intern's salary is $205k. More if you add in a spouse's income.

The BofA doctor loans do NOT take into account your school debt, that's the whole thing about it that makes it different. Otherwise we'd never qualify. But it's only the graduating med student's school debt it can ignore (if eligible for deferral). Any other debt that is NOT school loans is counted. My husband's law school debt is also factored in, which cancels out his current income basically.

I talked to the same lady you did and she estimated $240,000 based on the salary I gave her. I guess that must be because the interest rate was lower when I talked to her than when you did.

 

[165808]

I talked to the same lady you did and she estimated $240,000 based on the salary I gave her. I guess that must be because the interest rate was lower when I talked to her than when you did.

Hmmm. I never even gave her a salary, she just said that $205k was the maximum a single med student could get. Did you include a spouse or anything? We would've tried to see what my husband could add, but since he's in repayment from law school, we figured that was useless

 

[box29]

So I guess the average pre-approval amount for residents with a salary in the 40k-50k range is in the 200k-220k range. Is this assuming that FICO is >700?

From what I have been reading on these threads is that in order to qualify for a physician mortgage, one needs a FICO > 700. If you don't would you still qualify for another type of mortgage? I ask because my highest FICO is 781 but my others are 665 and 648. My partner is an speech pathologist with an income around 77k (no other debt except student loans) and FICOs in the 737 range and will be going in with me. We are just concerned how much we will qualify for and how big a condo we can get. We obviously don't want to spend the total amount for which we would be pre-approved and would prefer to spend much below that. Any suggestions?

Thanks

 

[165808]

So I guess the average pre-approval amount for residents with a salary in the 40k-50k range is in the 200k-220k range. Is this assuming that FICO is >700?

From what I have been reading on these threads is that in order to qualify for a physician mortgage, one needs a FICO > 700. If you don't would you still qualify for another type of mortgage? I ask because my highest FICO is 781 but my others are 665 and 648. My partner is an speech pathologist with an income around 77k (no other debt except student loans) and FICOs in the 737 range and will be going in with me. We are just concerned how much we will qualify for and how big a condo we can get. We obviously don't want to spend the total amount for which we would be pre-approved and would prefer to spend much below that. Any suggestions?

Thanks

The strict 700 FICO score was solely pertaining to this specific dr mortgage specialist at BofA that I dealt with, though I would assume it to be the case for other dr loans through BofA. And it's only the MS4/resident/doctor whose FICO score counts, they don't consider the spouse's score, whether good or bad....they just factor the spouse in if you want them to count in your total income for preapproval/loan purposes.

As far as other companies or other mortgages, I have no idea what their credit score reqs are, if any....

 

[Tachymeter]

So myfico.com is a reputable site to use? I guess I will try it then.

 

[box29]

So, I spoke with the rep from BoA for the physician mortgage and they are strict on the FICO. I also was pre-approved for the physician mortgage at Tower Mortgage - 100% financing, no PMI, no prepayment penalties, and ability to refinance whenever at a rate of 6.5%. I'm just wondering what you all thought. My partner and I have about 25K - 35K to put down but it would be great to keep some more funds for emergencies. We also got quotes for conventional 30 yr. fixed at 6.375% from Wells Fargo and BoA with 30k down.

Does anyone else have any suggestions? What about a 7/1 arm? Thanks for all replies.

 

[DoctorWannaBe]

So, I spoke with the rep from BoA for the physician mortgage and they are strict on the FICO. I also was pre-approved for the physician mortgage at Tower Mortgage - 100% financing, no PMI, no prepayment penalties, and ability to refinance whenever at a rate of 6.5%. I'm just wondering what you all thought. My partner and I have about 25K - 35K to put down but it would be great to keep some more funds for emergencies. We also got quotes for conventional 30 yr. fixed at 6.375% from Wells Fargo and BoA with 30k down.

Does anyone else have any suggestions? What about a 7/1 arm? Thanks for all replies.

I don't know anything about Tower, but someone posted on another thread that they had a bad experience with Tower. http://forums.studentdoctor.net/showthread.php?t=366770&highlight=tower 6.5% seems kind of high, since I got a quote of 6% a couple of weeks ago for a doctor's loan through BoA. Maybe rates have gone up that much in the last couple of weeks, but who knows.

A 7/1 ARM would be fine if you are sure you will refinance or move within 7 years. Your rate might be around 1% lower (in my experience) with an ARM. I got a 5/1 ARM during med school and it probably saved me a lot of money since I won't own the house when the rate resets.

If your 25-35K would be a 20% down payment, why not get a conventional loan if you can get one? I think the main benefit of doctor's loans is that you don't need a down payment and they don't consider your deferred student debt. Then again, with a difference of 1/8% between the doctor's and conventional loan, maybe you could invest your down payment and make more money that way.

 

[GYN DOC]

Any advice on physician home loans with no down payment - ie 100% loan. I spoke with a very well nationally known bank recently who said that because of recent issues in the market, these are loans will no longer be offered after march 31, 2008 at most national banks. I did fine a loan with physicianloans.com for a hybrid loan with a 5 yr fixed 5.38% interest rate on a $220,000 loan. Then it goes to an adjustable interest rate for the next three years with a lifetime cap of 5%. My husband and i dont plan on living in the place where we're going to complete residency for more than 5 yrs.
Does anyone have any advice on accepting a hybrid loan as opposed to a fixed 30-yr loan with higher interest? I'm sick of renting!

 

[Winged Scapula]

I'll move this to the Finance forum because I think you'll get more responses there.

I'd also like to know...because I was planning on waiting a bit before buying something and planning on a no or low down payment. For $220K here, I'd get a ghetto house or studio condo, although I suppose I could save 5% for a downpayment on something decent over the next few years but I can't imagine being able to save much more.

 

[THP]

I'll move this to the Finance forum because I think you'll get more responses there.

I'd also like to know...because I was planning on waiting a bit before buying something and planning on a no or low down payment. For $220K here, I'd get a ghetto house or studio condo, although I suppose I could save 5% for a downpayment on something decent over the next few years but I can't imagine being able to save much more.

I am currently shopping around for mortgages. I think the BofA doctor's loan is a pretty good deal. They had better rates than SunTrust and one local bank and you can qualify for a 30yr fixed or ARM which ever you prefer with similar rates. ARM rates are currently pretty high. I think the 30yr fixed is the way to go currently. Also you can qualify with 0 down without PMI. To me this gives you a lot of options on what to do with your savings. Apply it to principle to lower monthly payments or invest it and use the interest to augment your payments. Once you sink money into your house it is very difficult to get it out - unless you use a line of credit which has more fees. I though the fees for these loans seem reasonable as well.

I still have a few more lenders I am going to check out for conventional loans but I don't see any advantage to them.

 

[DoctorWannaBe]

I am currently shopping around for mortgages. I think the BofA doctor's loan is a pretty good deal. They had better rates than SunTrust and one local bank and you can qualify for a 30yr fixed or ARM which ever you prefer with similar rates. ARM rates are currently pretty high. I think the 30yr fixed is the way to go currently. Also you can qualify with 0 down without PMI. To me this gives you a lot of options on what to do with your savings. Apply it to principle to lower monthly payments or invest it and use the interest to augment your payments. Once you sink money into your house it is very difficult to get it out - unless you use a line of credit which has more fees. I though the fees for these loans seem reasonable as well.

I still have a few more lenders I am going to check out for conventional loans but I don't see any advantage to them.

THP, are you a medical student? I called Suntrust today and they said their doctor's loan is only for licensed physicians. I thought residents on SDN are getting mortgages from Suntrust, so maybe I'm not calling the right person. Does anyone have a direct number for someone at Suntrust who works with residents?

 

[mike1618]

I am a wholesale account rep with one of the bigger investment banks. I don't know anything about physician loans, but many of the physicians posting here would qualify for a typical FHA loan. Although, this would depend on the DTI. Unlike Fannie or Freddie, FHA allows school history to be viewed as employment history.

I have been in the industry for a number of years, so if any of you have any questions I would be glad to help. FYI, I do not originate. I'm just a non-trad looking to get into medicine.

 

[THP]

THP, are you a medical student? I called Suntrust today and they said their doctor's loan is only for licensed physicians. I thought residents on SDN are getting mortgages from Suntrust, so maybe I'm not calling the right person. Does anyone have a direct number for someone at Suntrust who works with residents?

I sent you a PM

 

[mike1618]

GYNDOC,

I think you would be making a big mistake buying a home on an adjustable rate. Everyday, I see these people who are struggling to make the fully amortized principle and interest payment because their ARM reset. They also can not sell their home because they are upside. You said that you wouldn't be in the home for more than five years, but what if you had to? If you bought a home now at 100%, you would also roll in closing costs into the loan. When you go to sell the home in 5 years, you probably will have paid down the loan only about 5-10k depending on the loan amt. You also need to take into consideration that most realtors are charging 6% to sell your home. Also, you can expect your total closing costs for selling the home to be 2-3% if you do not pay any seller concessions. If you do, it will be quite a bit more. Also, take into account your closing costs of buying the home. With all of this added in, you need to expect a minimum 10% home price appreciation to just break even. This has not been a problem in the past 5 years given the credit boom. You should seriously consider the repurcussions if the home does not appreciate or if it decreases in value.

These are things that you will not hear from your broker or real estate adjent, but it is definitely something to consider.

 

[randomedstudent]

I am a wholesale account rep with one of the bigger investment banks. I don't know anything about physician loans, but many of the physicians posting here would qualify for a typical FHA loan. Although, this would depend on the DTI. Unlike Fannie or Freddie, FHA allows school history to be viewed as employment history.

I have been in the industry for a number of years, so if any of you have any questions I would be glad to help. FYI, I do not originate. I'm just a non-trad looking to get into medicine.

Unfortunately, many of us (myself included) are too poor to even afford the 3% down (which I believe is about to become 5%) required by FHA. Plus, the FHA mortgage requires PMI (called something else but it's the same thing). The whole idea with the doctor's loans is to get 100% financing and avoid PMI. Also, it wasn't clear to me from the op's post whether he/she was researching true doctor's loans vs. just 100% financing. I have found through weeks spent calling a multitude of lenders that you really have to find a person who has dealt with residents before and is knowledgable about these loans. I had many lenders basically laugh in my face when I asked about 100% financing with no PMI and tell me no such thing exists, when I knew good and well that it does. BofA probably does more of these loans than anyone else, but if you're like me and don't have a BofA in your state then you can't use them. I know for a fact that SunTrust does them for residents (not just licensed physicians). There's a small local bank where I live that does them and is who I will be using. I just checked in with my guy there earlier this week and everything was fine - def. no mention of no longer being able to do these loans. However I haven't actually gone through with the process yet, so we'll see....

 

[randomedstudent]

I'll move this to the Finance forum because I think you'll get more responses there.

I'd also like to know...because I was planning on waiting a bit before buying something and planning on a no or low down payment. For $220K here, I'd get a ghetto house or studio condo, although I suppose I could save 5% for a downpayment on something decent over the next few years but I can't imagine being able to save much more.

The $220k is based on a single resident income - now that you're an attending with hopefully a much larger salary you should qualify for a lot more. My brother in law qualified for $800k on a 100% financed doctor's mortgage just after finishing fellowship. If you have a BofA near you I would look into it.

 

[randomedstudent]

Any advice on physician home loans with no down payment - ie 100% loan. I spoke with a very well nationally known bank recently who said that because of recent issues in the market, these are loans will no longer be offered after march 31, 2008 at most national banks. I did fine a loan with physicianloans.com for a hybrid loan with a 5 yr fixed 5.38% interest rate on a $220,000 loan. Then it goes to an adjustable interest rate for the next three years with a lifetime cap of 5%. My husband and i dont plan on living in the place where we're going to complete residency for more than 5 yrs.
Does anyone have any advice on accepting a hybrid loan as opposed to a fixed 30-yr loan with higher interest? I'm sick of renting!

Oh and to actually answer the op's question....if I were you I would def. do the 30 yr fixed if you have that option. The difference in the amount you will pay over the 3-5 years you plan to be in the house is probably minimal is the grand scheme of things (maybe a couple or few thousand) and IMO well worth the peace of mind of not having to worry about an adjustable rate. Remember even if you do move after residency, you may have trouble selling your house (many experts think the market is still going down and really may not start coming back up for 3-5 years) and might have to think about holding onto it and renting it out. If you can't tell, I'm a pessimist and a worst-case-scenario kind of person, so take that into account.

 

[mike1618]

Random,

That makes sense for many residents. I am a big opponent of 100% loans. Most residents are only planning on being in the home for a few years. Given closing costs on the purchase, closing costs on the sale, and realtors fees for the sale you would need to hope for at least 10% home price appreciation. This hasn't been a problem in the past but depreciation is now a reality. Many of these residents are going to get stuck in that home. If they took out a 100% LTV loan with an ARM, they most likely will not be able to refinance it in a few years once the ARM resets. I can tell you that most lenders have done away with 100% LTV loans. On a daily basis, I see people who can not get out of their homes and can not refinance their ARM's because they are upside down. I know nothing about physicians loans, but I do know that 100% LTV and an adjustable rate spells disaster and a financial nightmare.

As for the mortgage insurance that you are talking about on FHA loans, it is called UFMIP. It is a 1.5% up front premium. There will also be a 0.5% annual premium as well. This sounds awful, but given that FHA rates will put you in the high 5% range on a 30 yr fx, it may in fact be the better route.

My personal opinion is that if you have to have 100% financing, you shouldn't be buying a home. It can make a world of financial trouble in your future. This easy credit is the same reason why we are in the real estate market that we are in now.

 

[randomedstudent]

Random,

That makes sense for many residents. I am a big opponent of 100% loans. Most residents are only planning on being in the home for a few years. Given closing costs on the purchase, closing costs on the sale, and realtors fees for the sale you would need to hope for at least 10% home price appreciation. This hasn't been a problem in the past but depreciation is now a reality. Many of these residents are going to get stuck in that home. If they took out a 100% LTV loan with an ARM, they most likely will not be able to refinance it in a few years once the ARM resets. I can tell you that most lenders have done away with 100% LTV loans. On a daily basis, I see people who can not get out of their homes and can not refinance their ARM's because they are upside down. I know nothing about physicians loans, but I do know that 100% LTV and an adjustable rate spells disaster and a financial nightmare.

As for the mortgage insurance that you are talking about on FHA loans, it is called UFMIP. It is a 1.5% up front premium. There will also be a 0.5% annual premium as well. This sounds awful, but given that FHA rates will put you in the high 5% range on a 30 yr fx, it may in fact be the better route.

My personal opinion is that if you have to have 100% financing, you shouldn't be buying a home. It can make a world of financial trouble in your future. This easy credit is the same reason why we are in the real estate market that we are in now.

Well, I would have to respectfully disagree that 100% financing is the root of the current mortgage crisis - I think it is more due to people buying homes they cannot afford, eg. using ARMs to qualify for way more than they really should. I do think that 100% financing is part of the problem, but I think the true root of the problem is people buying what they cannot afford. You may disagree, but I feel that resident physicians should not be lumped in with people in the subprime mess. If I told you that my husband and I will have a combined income of over $90k and are looking homes with a PITI of no more than $1500 and we have no other debt other than deferred student loans which we do not have to pay on until after residency (when our salaries will increase substantially) would you still think we are idiots? Additionally, not all markets have been hit by this crisis - I can tell you that where I am looking it is a seller's market and houses are selling in less than a week on the market and for asking price or more.

Also, don't assume that just b/c someone is doing a doctor's loan they can't afford a downpayment - they may just prefer to put that money towards something else (retirement, home improvements, paying off student loans early, etc). Many people would probably admit that if they could get 100% financing with no PMI and a rate that is only slightly higher than a conventional loan they would do it (last rate quote for me was 6.19%, I have heard BofA was going as low as 5.5 or something on their doctor loans). And for your arguement of possibly having to bring money to the table at selling - well yes, of course this is possibility, but what difference does it really make if you pay $20-30k upfront as a downpayment vs. paying it at closing IF you sell for a loss - either way you are out $20-30k except that the former is a guaranteed loss whereas the latter is not, in that the house might appreciate enough that you don't have to bring any money to close. Is my logic off here?

Sorry, if this isn't making much sense...I guess to sum up, I think you have to consider individual situations and not make blanket generalizations.

 

[randomedstudent]

Also you have to consider that residents are all but guaranteed to at least triple their salary once they finish residency so even in the case of being stuck with a home that isn't selling, it most likely isn't exactly going to spell financial ruin if they have to hang onto it for awhile.

 

[Jocomama]

Agree, no 100% loans, however, if you are a resident and can get a 5yr ARM interest only that is less than a 30yr fixed, then do it.
Make sure you have downpayment, since lenders are not giving good rates on 0-10% down, and you better have perfect credit.

In my 9 yr hiatus from clinical medicine and into the mortgage banking industry, I NEVER did a loan for anyone with less than 5% down. I passed the 0 downs to my colleagues.

Random,

That makes sense for many residents. I am a big opponent of 100% loans. Most residents are only planning on being in the home for a few years. Given closing costs on the purchase, closing costs on the sale, and realtors fees for the sale you would need to hope for at least 10% home price appreciation. This hasn't been a problem in the past but depreciation is now a reality. Many of these residents are going to get stuck in that home. If they took out a 100% LTV loan with an ARM, they most likely will not be able to refinance it in a few years once the ARM resets. I can tell you that most lenders have done away with 100% LTV loans. On a daily basis, I see people who can not get out of their homes and can not refinance their ARM's because they are upside down. I know nothing about physicians loans, but I do know that 100% LTV and an adjustable rate spells disaster and a financial nightmare.

As for the mortgage insurance that you are talking about on FHA loans, it is called UFMIP. It is a 1.5% up front premium. There will also be a 0.5% annual premium as well. This sounds awful, but given that FHA rates will put you in the high 5% range on a 30 yr fx, it may in fact be the better route.

My personal opinion is that if you have to have 100% financing, you shouldn't be buying a home. It can make a world of financial trouble in your future. This easy credit is the same reason why we are in the real estate market that we are in now.

 

[mike1618]

I do agree with you that easy credit is only part of the problem and that many borrowing more than they could afford is also a big problem. Then again, they are one in the same...easy credit = borrowing too much. I also agree with you that a physician is not the average borrower.

On a recent National study, Charlotte NC was the only city that did not have home price depreciation. However, that does not mean that there are not pockets or areas that are still in demand. You should also take into account that it is possible that we are not near a bottom and your seller's market may turn into nobody's market real fast.

I wasn't assuming that all residents don't have the money to put down on a home. I was responding to your statement, "Unfortunately, many of us (myself included) are too poor to even afford the 3% down". My point was that if you don't have enough money to put down on a house, you should not be buying one. On the other hand, I do agree with your logic that if you have the reserves/assets then maybe you don't want to put it into your home's equity.

If you do in fact find a resident's loan at 5.5% or even 6.19% on a 30 year fixed with no PMI and a high LTV, I would love to know about it. When I say "find" I mean someone in today's market that has closed on their loan at that rate. I personally can't believe that that would be possible, unless you are buying the rate down quite a bit. If it really is still out there, I would agree with your logic.

Everyone's situation is going to be different, but I am looking at things from a lender's risk standpoint. Across the board 100% financing is a dangerous loan. You may have the reserves to put 20-30k into the home to sell it, but many others would not be in that situation. This is the same reason why thousands of homeowners per week are walking away from their homes.

You mentioned that you are looking to spend $1500 PITI. I am not sure where you live, but I live in FL and I was paying over $1500 on $148,000, 30 yr fixed at 5.5%. Granted, my taxes and ins. were probably more than you will have to pay. Just out of curiosity, what state do you live in?

I apologize for generalizing, but when you give advice on these loans it is important to consider the financial risk that the borrower may face down the road.

 

[randomedstudent]

I do agree with you that easy credit is only part of the problem and that many borrowing more than they could afford is also a big problem. Then again, they are one in the same...easy credit = borrowing too much. I also agree with you that a physician is not the average borrower.

On a recent National study, Charlotte NC was the only city that did not have home price depreciation. However, that does not mean that there are not pockets or areas that are still in demand. You should also take into account that it is possible that we are not near a bottom and your seller's market may turn into nobody's market real fast.

I wasn't assuming that all residents don't have the money to put down on a home. I was responding to your statement, "Unfortunately, many of us (myself included) are too poor to even afford the 3% down". My point was that if you don't have enough money to put down on a house, you should not be buying one. On the other hand, I do agree with your logic that if you have the reserves/assets then maybe you don't want to put it into your home's equity.

If you do in fact find a resident's loan at 5.5% or even 6.19% on a 30 year fixed with no PMI and a high LTV, I would love to know about it. When I say "find" I mean someone in today's market that has closed on their loan at that rate. I personally can't believe that that would be possible, unless you are buying the rate down quite a bit. If it really is still out there, I would agree with your logic.

Everyone's situation is going to be different, but I am looking at things from a lender's risk standpoint. Across the board 100% financing is a dangerous loan. You may have the reserves to put 20-30k into the home to sell it, but many others would not be in that situation. This is the same reason why thousands of homeowners per week are walking away from their homes.

You mentioned that you are looking to spend $1500 PITI. I am not sure where you live, but I live in FL and I was paying over $1500 on $148,000, 30 yr fixed at 5.5%. Granted, my taxes and ins. were probably more than you will have to pay. Just out of curiosity, what state do you live in?

I apologize for generalizing, but when you give advice on these loans it is important to consider the financial risk that the borrower may face down the road.

I live in Louisville, KY. According to an article in our local paper just last week home prices here were up 3% in the past year. You are correct that our property taxes are probably much lower than yours were (usually about 1%) - we are looking at homes in the $180-220k range. Like I said, I was just quoted 6.19% last week from my local bank, and that is paying no points, closing costs are less than $3k. I do know of someone who closed recently with a doctor's loan through BofA at 5.7%, but that was a 7 yr. ARM.

While I am not personally a fan of ARMs, esp. since my husband and I plan to remain in the city where we are doing residency and would likely stay in the house well past residency, I think they can be a good option for most residents who will move after their 3-5 year residency. Again, many people like point out that you may not be able to sell and then you risk your rate going up, yada yada. Well, yes, this is true, but again, remember that at this time the resident will most likely be starting an attending job and tripling or quadrupling their salary so even if they have to hang onto the house for awhile and pay a little more each month on it, it won't exactly be crippling financially speaking (assuming they don't go out and immediately buy a million dollar home and 2 new Lexuses or something).

I do appreciate your input as clearly you have more experience with this stuff than I do, I certainly don't claim to be an expert on home financing (I have never even bought a home, we are looking for our first one right now!). But you also say multiple times that you have no experience with "doctor's mortgages" ie. 100% financing, no PMI, good rate, so I'm just making the case that A) these do exist and B) they are a good option for most residents, provided they are living well within their means and not buying like a $240k home on one resident salary (which is what we were approved for, haha!).

 

[mike1618]

Random,

I wish the best of luck for you and your husband. Thanks for giving your input. It is always nice to learn other's opinions.

Good luck with your home loan shopping!

 

[GYN DOC]

Hey, I'm in Louisville also. I originally went to chase bank. They're the ones saying that they're not going to offer any more 100% loans. Suntrust i think actually still does. Chase also raised the rate because they considered our school loans. THe physicianloan did not consider my student loans but would consider my husband which would have raised my rates. So we just applied under my name and credit. With the hybrid loans i was informed that you could refinance within the five year range and apply for a 30 yr fixed if it turns out i would have to live the city for more than five years - that way i could avoid the ARM. Has anyone else heard that? My husband and i went to atlanta to look for houses. We found a 4 bed 3.5 bath with a full finished basement with 4 extra rooms for $169,000. THis house was built in 2000 and in perfect condition with just paint and carpeting needed. THe house however was a forclosed house in a neighborhood where the next door house sold for $250,000 two years ago. All the houses in the neighborhood range $220 - 275,000. I figure that if we purchase at such a low mortgage from the bank and sell in 5 years we could make a significant profit if the market is good. If the market is bad that house couldn't sell for less - not much loss. Any feelings?

 

[Yooper2008]

I am currently shopping loans as well. I was told that for an FHA loan we would have to prove our income meaning that a contract wouldn't work and we couldn't buy before I start my residency(since my wife doesn't work). Does anybody know if this is true? If so, this one of the reasons why I think the Dr. Loan is the best option for me(in addition to the no PMI). I am in an area where they only offer 95% financing, but we will be able to come up with the 5%. Anybody have personal experience with using the Dr. Loan. I am paranoid that they are going to sneak some fees in and I can't believe they are just jumping to give me a great deal just because I will suddenly have M.D. attached to my name in May. All in all this seems like the best option for me with the limited research I have put in so far. Any input?

 

[mike1618]

You are correct. FHA does require proof of income, meaning you would have to have already started your residency. Based on what everyone is talking about, the physician loan seems like a great program. However, I am still reluctant to jump on the bandwagon because I have not had any direct correspondence with anyone who has actually closed on one recently. More and more loan programs are being discontinued due to lack of investor confidence and demand. I have a hard time believing that these loans are being offered at 100% LTV, with no PMI, while not including deferred student loans in the debt ratios.

I would love to hear from someone who has obtained one of these loans in the last month or so.

 

[bbawco1]

I've not yet closed on my house, but I am under contract with the BofA doctor loan. It was very competitive with all other loans that I have researched and was very helpful to use when negotiating with builders and their own lenders. Many of the builders I spoke with were familiar with the loan and knew that they could not beat it with their lenders.

Of course, I have not yet closed and therefore am just running with the good faith estimate, so I will see with the closing; however, I do not anticipate much more as the closing costs are so far reasonable.

 

[mike1618]

BBAW,

Was this at 100% LTV with no PMI? Also, what were the terms of the loan (i.e. 5 yr ARM, 7 yr ARM, or 30 yr fixed). Also, what range of rates were you seeing with these loans?

Thanks for the help!

 

[bbawco1]

100% / no pmi / 30 yr fixed(rates were lower than any ARM) / rate of 5.835 last week / very reasonable closing costs

 

[ESPNdeportes]

So, we recently had a talk at our school about the whole physician loan thing, and I'm wondering if its something I should do.

Here is my situation. I'm lucky enough, through some parental help and spouse help, to only have 70k in debt, consolidated at 3.875%. Monthly payment low 300's. I will not qualify for deferrement. My wife and I have about 15k to put down on a home.

Would anyone still advise us to get a physician loan, even though we have money for a downpayment and won't be in deferral? Would I even qualify? I guess the only benefit I see is no PMI. Any ideas?

Thanks!

 

[shwtime11]

I've also been offerred 100% financing for $140,000/ no PMI/ 30 year fixed at 5.8 and 5/1 ARM at 5.38/ closing costs were estimated around $4,000. Other banks I talked to knew about the BoA loan and all agreed they would be unable to beat their rates. I'll post when I close, but my mortgage broker says they close on these deals regularly.

 

[mgdsh]

Well theres quite a few details you've left out, like:

- What kind of rate are you getting with 15k down?
- How much is your desired house worth?
- What kind of rate are they offering you with a physician home loan?
- Do you need that $15k nest egg saved up for anything in particular or an emergency fund over the next few years?
- How long do you plan to live in the house?
- What area is the house in?

etc etc.

 

[doctorloans]

I'm sure you would qualify. I would just ask around. Compare the two, and pick the one that suits you.

One thing to consider regarding the physician loan is that you usually won't pay PMI. That is about 80-100 bucks per month.

Also, having 15k to put down on a house is great, but I'm not sure I would put all that money down if I didn't have to. You could do a 0%, no pmi doctor loan and stick that 15 in a money market account and earn 3% on it right now.

Mgdsh has some great questions as well.

 

[Soundwave]

bleah, 3% money market account? Thats not even going to beat inflation, you will be losing money every year on that account. 15K is not that much for a downpayment for a decent house; you should be able to get a better interest rate if you are able to put more down (it makes you less risky). That being said, if you are planning on purchasing a new vehicle or forsee some other large expenditure in your new future, you should be borrow more for your house as the interest on that loan is tax deductable. Irrespective of your forseeable future, you should always have a few thousand in cash sitting around in your bank acount in case of emergencies too.

 

[doctorloans]

Yes, 3% is not a ton of money, but my reasoning is that a bird in the hand is better than 2 in the air.

What if home prices continue to drop and you end up losing some of that down payment? Why not hold onto the 15k (or maybe put 10k down) and see where the market goes? I personally am against putting all your eggs in one basket.

 

[xanthines]

I agree. I don't own a home but I was roommates with a fellow student that did purchase. I can tell you firsthand that owning a home is expensive beyond the mortgage. Things break and there's no landlord to call. It's all out of YOUR pocket. If you don't have the time AND skills (which I suspect you won't, since you're on this website ) to fix things, you'll to have to pay someone to do it.

Unless that 15k represents a 20% downpayment, there's not really any point to putting all into the purchase. Better to save some for upkeep.

Just my opinion...

-X

P.S. Stick your 15k into an online savings account like HSBC Online or ING Orange. They're both 3%+ and you can more or less withdraw instantly.

Yes, 3% is not a ton of money, but my reasoning is that a bird in the hand is better than 2 in the air.

What if home prices continue to drop and you end up losing some of that down payment? Why not hold onto the 15k (or maybe put 10k down) and see where the market goes? I personally am against putting all your eggs in one basket.

 

[doctorloans]

Exactly. I didn't even mention that or think of it when posting. These are wise words.

Plus, 20% down will get only you a SLIGHTLY better rate. Not worth it, in my opinion. Unless you just have tons of cash in the bank .

 

[jmuame03]

Has someone done a true comparison between the two?

 

[Suprahelical]

Thinking of going w/ BofA myself for a "doctor's loan." I too have about a total of 50K saved and was originally planning on putting 30K into a downpayment on a ~220K house. I'm 99% sure I'll be doing a fellowship which puts me there 5 years, thinking about going with 7/1 ARM with rates right now about quoted to me per lender at 5.25%. Does anyone know if BofA lets you buy down even the ARMs, say a half a point? I am now thinking, like above posters, to put only about 10K down, pay off the 12k car note, and put most of the rest in ING Orange savings at 3%. What do you all think?

 

[doctorloans]

^ Great plan. Always pay off that higher interest rate debt first. Cars are the worst money black holes ever .

 

[Duchenne's]

I am in an area where they only offer 95% financing, but we will be able to come up with the 5%.

So are the doctor's loans location-dependent? In other words, will B of A only give you 100% financing if you live in a certain area?

I talked to a BofA rep here locally a few weeks ago, and she told me that she could only do 95% financing, but others are saying they are getting 100% financing through the same lender (BofA).

Does anyone know?

 

[box29]

So are the doctor's loans location-dependent? In other words, will B of A only give you 100% financing if you live in a certain area?

I talked to a BofA rep here locally a few weeks ago, and she told me that she could only do 95% financing, but others are saying they are getting 100% financing through the same lender (BofA).

Does anyone know?

You can try her. She deals specifically with physician mortgages:

[email protected]

Deborah Wilson
Chairman's Club Mortgage Loan Officer
4131 NW 122nd OKC OK 73120
405-230-3181 Fax 405-936-9426
Pager 800-745-5864 Cell 405-514-9165