Physician Loans

[SassyCat]

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Has anyone recently had any luck getting documentation that their student loans are in forbearance for a year. I do not know how to go about getting this letter from direct loans since I am still in my fourth yr of school and decisions about repayment vs forbearance aren't made yet.

 

[phipsi]

I can't speak for other lenders, but on our physician loan we don't ask for any documentation if you're within the first two years of residency.

 

[Guile]

Has anyone recently had any luck getting documentation that their student loans are in forbearance for a year. I do not know how to go about getting this letter from direct loans since I am still in my fourth yr of school and decisions about repayment vs forbearance aren't made yet.

My loans show up as "not in repayment" currently on my credit report. That was good enough for my lender. They didn't need any other documentation.

 

[tyroMD]

If you're going into residency, I wouldn't personally buy. The turnaround is quick and if you don't have a down payment, you're taking a huge risk with an ARM. You'll be able to buy a huge house on the other end, just wait a bit. It's not worth it. We bought and the only reason we're not upside down is that we put almost 40 k down from a previous house.

 

[zeloc]

I don't quite agree with the previous post. If you can qualify for a fixed-rate mortgage, that is the best option, but if you cannot then getting an ARM can be a great way to get into the market. I'm assuming that you will be living in the area for at least 3-5 years and you'll want to choose a good location so that you will be able to re-sell it/lease it afterwards. I got a 5/1 ARM and to prevent getting upside down you just want to make sure that you refinance within the 5 year period to a fixed mortgage and ideally make some principal payments during the 5 years.

I have had a mortgage with Compass Bank for a few years (Drew Daniels) and cannot recommend them. They made a number of mistakes initially and even now they do not fully respond to e-mails/phone calls and give delayed responses and I am now having trouble getting them to correct something on my mortgage which could end up costing a lot. If this is your only option for a 0%, no PMI loan I think it is still worth it, but otherwise I would look elsewhere, their customer service is lacking.

Edit: Interesting, I didn't realize that I started this thread so many years ago, surprised that it is still active and glad to see that it has been helpful to others.

 

[knight3w]

Has anyone recently had any luck getting documentation that their student loans are in forbearance for a year. I do not know how to go about getting this letter from direct loans since I am still in my fourth yr of school and decisions about repayment vs forbearance aren't made yet.

I am having trouble as well. I am a fourth year medical student and my loans are currently listed as "in school." The bank wants me to have proof that my loans are in forbearance for 12 months from closing date. It would be stupid for me to put them into forbearance now (if I even could) since I am still in school and not accruing interest, plus I have 6 months of grace and then if I wanted I could put them into forbearance for the entire time I am in residency (as mandated by federal law). Any suggestions?

 

[ThePursuit]

physician loans are only good for purchasing a home if you are in practice, already in residency, or are within 60 days of starting a residency, so you M4's just starting are really just SOL unless there's some crazy backdoor deal you found.

 

[jwk]

I got a 5/1 ARM and to prevent getting upside down you just want to make sure that you refinance within the 5 year period to a fixed mortgage and ideally make some principal payments during the 5 years.

Refinancing within the five year period and making some principal payments has absolutely nothing to do with whether or not you will be upside down on a mortgage or not. If your home decreases in value during the time you own it to where it's worth less than the mortgage balance, you're upside down, regardless of how much principal you've paid.

 

[Sol Rosenberg]

Refinancing within the five year period and making some principal payments has absolutely nothing to do with whether or not you will be upside down on a mortgage or not. If your home decreases in value during the time you own it to where it's worth less than the mortgage balance, you're upside down, regardless of how much principal you've paid.

Making principal payments definitely does have an impact on whether you are upside down on a home when you try to sell it.

 

[jwk]

Making principal payments definitely does have an impact on whether you are upside down on a home when you try to sell it.

Try reading my post again. If your home decreases in value during the time you own it to where it's worth less than the mortgage balance, you're upside down, regardless of how much principal you've paid. It's all about appraised value. Your loan balance will of course be smaller as you make payments - that DOES NOT automatically mean you have more equity in your home.

This also doesn't take into consideration the 6-7% real estate commission and any seller-paid closing costs. So - elementary school math here - if you buy a house for $100,000 today, and list it for resale a year from now, you would probably have to SELL IT for $110k just to break even, which means you'd have to list it for even more than that.

 

[Sol Rosenberg]

Try reading my post again. If your home decreases in value during the time you own it to where it's worth less than the mortgage balance, you're upside down, regardless of how much principal you've paid. It's all about appraised value. Your loan balance will of course be smaller as you make payments - that DOES NOT automatically mean you have more equity in your home.

OK, I'll read your post again. Here it is.

Refinancing within the five year period and making some principal payments has absolutely nothing to do with whether or not you will be upside down on a mortgage or not. If your home decreases in value during the time you own it to where it's worth less than the mortgage balance, you're upside down, regardless of how much principal you've paid.

Looks like you said that making principal payments has absolutely nothing to do with whether you will be upside-down on a mortgage. Am I misreading that?

This also doesn't take into consideration the 6-7% real estate commission and any seller-paid closing costs. So - elementary school math here - if you buy a house for $100,000 today, and list it for resale a year from now, you would probably have to SELL IT for $110k just to break even, which means you'd have to list it for even more than that.

Of course whether you will be upside-down on a home depends upon the market price of the home when you sell it (or the difference between the market price when you buy it and sell it.) However, it also depends upon how much you owe, which definitely DOES depend on any principal payments that you made during the course of the loan. I see you sort of acknowledge this in your last post; however I was originally pointing out that your first statement was completely untrue.

 

[zeloc]

Both of you are correct, I could have been clearer in my post but I think I was reading TyroMD's post and writing a different post at the same time so I didn't quite make sense.

I prefer to think of a 5/1 ARM as a way to get into the market when one wouldn't ordinarily qualify. I would not plan on getting one without planning on making principal payments because you are dramatically increasing the amount you are spending due to interest. Regardless of what happens to the home value, if your salary is constant and you are making principal payments, you should be able to handle it, the question is whether you will be able to refinance given the new value of the home. Student loan debt is also important, you will want to make a plan to pay it off as soon as possible as some lenders will look at the amount of debt as a factor in giving a loan.

 

[Sol Rosenberg]

I prefer to think of a 5/1 ARM as a way to get into the market when one wouldn't ordinarily qualify. I would not plan on getting one without planning on making principal payments because you are dramatically increasing the amount you are spending due to interest. Regardless of what happens to the home value, if your salary is constant and you are making principal payments, you should be able to handle it, the question is whether you will be able to refinance given the new value of the home. Student loan debt is also important, you will want to make a plan to pay it off as soon as possible as some lenders will look at the amount of debt as a factor in giving a loan.

I don't quite think of things that way. First, nowadays, an ARM is not necessarily a way to get into a market for which you would not ordinarily qualify. Not all, but some lenders, need to qualify you at a rate that is higher than the teaser rate of the ARM. For example, some use a monthly payment that is computed at 2% more than the current interest rates when figuring your debt:income ratios for a 5/1 ARM. Thus, for qualifying purposes, your payment will be higher than it would be for a 30-year loan (so it is actually harder to qualify for the 5/1 than for the 30-year loan, which is as it should be because the 5/1 is definitely a more risky loan for both lender and borrower.)

I'm not sure I understand why you think making principal payments is more important on a 5/1 ARM than any other loan. If you are worried about being underwater when you go to sell your house after residency, it doesn't matter what type of loan you have; in fact, the 5/1 will have a lower teaser rate than a 30-year fixed during those 5 years, so you will be paying less total interest during that time. This is a personal/moral decision, but I would put as little principal into a house that I was only planning on keeping for 5 years, because if it does end up being very underwater, you can just walk away from it and lose less than you would have lost if you paid down the principal.