No more closing 60 days before your residency starts?

[emeddo]

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I was talking on the phone today with a Bank of America loan officer, one who previously oversaw the physician loan program that is no longer in existence, he told me that the hard truth anyone starting a residency this year must face is that the way the "laws" are currently written there is no way anyone can close on a loan until AFTER their new employment position has started. This means no closing until after July 1st (or your first day of residency) for anyone. This sucks in a number of different ways (including not being able to get the 8k tax credit).

Has anyone else heard anything similar or know of banks that will still allow you to close 60 days before your first day of residency. I even should have enough for the 20% down payment and was still told by three different banks today that this would be the case (not being able to close till my job started). Any advice anyone has would be great.

 

[dotdash]

We bought a house last year (6/09) and were forced to wait until the first day of residency to be able to count the residency income toward having the loan approved. In spite of being shown a signed contract, the underwriters at Wells Fargo were unwilling to sign off until the actual start day of employment. There was some language in the contract about "pending confirmation" by the hiring committee, and they were afraid that that was not just the rubber stamp it was.

I argued and cajoled and threatened, but no dice. Things may have loosened up a bit since then -- that was the height of the tight credit market -- but you'll want to check with the underwriter before you make a closing date. (Not just the processor, the actual underwriter). The sellers were pretty mad when the closing got pushed back.

 

[Live4Life]

I was talking on the phone today with a Bank of America loan officer, one who previously oversaw the physician loan program that is no longer in existence, he told me that the hard truth anyone starting a residency this year must face is that the way the "laws" are currently written there is no way anyone can close on a loan until AFTER their new employment position has started. This means no closing until after July 1st (or your first day of residency) for anyone. This sucks in a number of different ways (including not being able to get the 8k tax credit).

Has anyone else heard anything similar or know of banks that will still allow you to close 60 days before your first day of residency. I even should have enough for the 20% down payment and was still told by three different banks today that this would be the case (not being able to close till my job started). Any advice anyone has would be great.

We were able to close about three weeks prior to the first day of residency, but only because we:

(1) had a decent down payment [30%]
(2) pass a pee test because that was the only "contingency" listed in the residency contract that would prevent me from starting the new job.

In this market, I highly doubt you will be able to close before the first day of residency. We were BEYOND fortunate in being able to close before starting and it took a lot of work - I called at least 20-30 lenders before finding one that was willing to proceed. Also, lets not forget the underwriting process, even after I found a lender willing to go forward with the loan, proving to the underwriter that we were a risk worth taking was a whole other matter. I faxed at least 250 pages of financial records to the underwriter and had to have numerous letters written from the program director, state licensing board, president of the hospital, and dean of the medical school. It was the biggest pain ever and I would never go through it again, I would simply wait until after I began. Also, just so you know, it really is the law and the lender wasn't just feeding you nonsense.

If you do decide to go through with it, I wish you the best of luck!

 

[CompassMBO]

BBVA Compass will close a physician loan before residency start date, but not in all states.

 

[Kris1]

That really sucks because not only do we miss out on the tax credit, but we essentially have to move twice if we plan to buy. When we do get to move in to our new homes, it will be while working 80 hours a week and having no time to do any home projects.

 

[Kris1]

BBVA Compass will close a physician loan before residency start date, but not in all states.

How about in Florida?

 

[CompassMBO]

How about in Florida?

Not in South Florida, meaning the Miami, West Palm Beach area. This just changed recently.

However, in the next month, Compass will start doing physician loans in California, but with some restrictions.

 

[Mtloomis]

I'm in Real Estate here in Ohio. I still work with 2 lenders who do Physician Loans both of which will close 60 days before work starts. One of which I know lends to quite a few other states. The programs are still out there for a lot of places.

Both FHA and conventional do require pay stubs though.

 

[Kris1]

I'm in Real Estate here in Ohio. I still work with 2 lenders who do Physician Loans both of which will close 60 days before work starts. One of which I know lends to quite a few other states. The programs are still out there for a lot of places.

Both FHA and conventional do require pay stubs though.

Any ideas about whether or not VA loans will require pay stubs or would a contract suffice?

 

[Kris1]

Not in South Florida, meaning the Miami, West Palm Beach area. This just changed recently.

However, in the next month, Compass will start doing physician loans in California, but with some restrictions.

Orlando perhaps?

 

[Mtloomis]

Any ideas about whether or not VA loans will require pay stubs or would a contract suffice?

I don't know. If I had to venture a guess I would think that they would want pay stubs. That assumption is based on the fact FHA does and they are both government loans.

However if someone has other info I wouldn't argue.

 

[Mtloomis]

Orlando perhaps?

Lenders get certified by state. They don't have to be local to do certain loans. If a lender does Physician loans and they are certified to lend in the state of Florida they can do it in any city.

That being said the market will determine the terms of the loans. The 0% down may not apply everywhere. There may be other changes as well.

 

[CompassMBO]

Lenders get certified by state. They don't have to be local to do certain loans. If a lender does Physician loans and they are certified to lend in the state of Florida they can do it in any city.

That being said the market will determine the terms of the loans. The 0% down may not apply everywhere. There may be other changes as well.

Not exactly the case with us. We have chosen to not lend in the South Florida area due to market conditions there. Orlando might be possible for us to do the Physician's loan in. If the house is in a "declining" area, we will require a 5% down payment. It just depends on a number of factors.

 

[Kris1]

Thanks for the input!

 

[Constellation]

Does anyone know how having a co-signer on the loan would factor into this? Would having a co-signer (such as a parent or in-law) allow you to skip some of the hassles?

 

[panetrain]

Does anyone know how having a co-signer on the loan would factor into this? Would having a co-signer (such as a parent or in-law) allow you to skip some of the hassles?

Co-signer will not matter unless your credit is ****. Only thing banks are looking at now is credit, down payment, past two years of income averaged, outstanding debt. If you have little to no money down you get no house. If you have low income you get no house. If you make good money but have huge debt, you get no house without huge down payment. If you make good money and have bad credit you get no house without monster down payment. If you just started working you get no house without huge down payment. Banks want at least two years of income averaged. Banks are not favoring doctors anymore when it comes to lending. Those days are long gone. 👎 Most docs will not break even from their debt burden for more than 10-15 years after practice. That means they will have no true net worth for 10-15+ years after starting their practice. Banks understand this and have altered their lending habits. 😱

 

[MDInvestor]

I was talking on the phone today with a Bank of America loan officer, one who previously oversaw the physician loan program that is no longer in existence, he told me that the hard truth anyone starting a residency this year must face is that the way the "laws" are currently written there is no way anyone can close on a loan until AFTER their new employment position has started. This means no closing until after July 1st (or your first day of residency) for anyone. This sucks in a number of different ways (including not being able to get the 8k tax credit).

Has anyone else heard anything similar or know of banks that will still allow you to close 60 days before your first day of residency. I even should have enough for the 20% down payment and was still told by three different banks today that this would be the case (not being able to close till my job started). Any advice anyone has would be great.

Might have something in your contract stating its not 100% bulletproof.

FHA guidelines, paragraph 203.18 version 2004, projected income (I'll paraphrase): If you are getting a non-revocable contract for employment that will begin within 60 after closing, the income is acceptable for qualifying purposes.