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March 2018

The Truth about the Physician Home Loan

By | Life Coach, Loan Talk | No Comments

The truth behind why so many banks have a physician home loan…

It seems lately most banks have started offering a “physician loan”.  Just as you found our site you found 15 others all promising low rates, limited underwriting, and smooth closing.  You are smart enough to know that is not always the case. The banking industry has always desired a way to get high-income earners to become loyal clients. How do you accomplish that?  Do you promise great service? You should– even though everyone in America expects great service.  From McDonald’s too personal financial advisor to the local barber. So if a doctor can go into any financial institution and receive royalty treatment just by uttering their profession. How can you get a doctor to think they need the bank instead of the bank needing them? How does the bank create loyal high income earning clients?

The banks’ physician home loan solution

You all have one thing in common.  Long periods of delayed gratification and sacrifice. Starting at undergrad continuing to med school with internships, residencies and countless sessions of kissing the butt of whoever you had to at the time.  All of that combined with astronomical student loans and earning little to no pay for a decade.  This is the banks’ opportunity.

Who likes paying their student loans?  It did not take long for the banks to figure out that student loans bred resentment, not loyalty.   What could the bank offer to counteract that resentment?  EVERYBODY loves the feeling of buying their first home.  It is romantic.  I still remember my wife and I’s first home buying experience the excitement, the nervousness, and the love that we felt.  The banks realized if they could help make the difficult transition at the end of your schooling to the first “real” position held easier, then you would feel like the banks did you the favor!  Even though you were 3-6 months out from the serious money.  Your mindset is still that of the low-income-earning-high-loan-burdened student how deserves something nice for all their hard work.  LIGHTBULB!  The banks could take a calculated (low) risk of mortgage lending to a highly regarded profession with a solid track record of high income earning levels.  Creating a sense of loyalty from the doctor to the bank.  Genius!

Is the physician home loan a bad thing?

To answer that question is extremely personal. A question that comes with a lot of preconceived notions and bias. I am a morally driven capitalist.  I want to make higher than average income but not at the expense of my soul or reputation. My thought is everybody uses a financial institution and you are a highly educated adult.  Just as prescriptions can be addictive and misused to harm oneself so can borrowing money.  Answer these 3 questions to know if you are using the product correctly. Does the home you have interest in fill your needs or fill your ego?   Will this home hinder, help or neutrally effect my 3-5 year career goals?  Does renting the same home cost more or less in your area?  Remember the easiest person to deceive is ourselves.

That is the truth which is likely to cost me business.  I feel great that somebody finally said it…

If you are ready to find the best physician home loan available in your state click here to see all your options.

5 Relocation Mistakes Made By Physicians

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5 Relocation Mistakes Made By Physicians

Moving your home as a physician can seem as though it’s a never-ending set of hurdles, which you and your family must jump through to make the move a success; while it’s true you will be faced with a unique selection of challenges, by understanding some of the main mistakes physicians make, you can avoid making them yourself – which is why, in this post, we’re going to look at the top 5 mistakes made by relocation physicians.

Relocation Mistake #1: Not Knowing Where to Start

Relocating can seem daunting – and the technical side of things can make things even more confusing. One of the biggest mistakes made by relocation physicians is not understanding the process involved with actually securing your dream home – and if you want to begin the moving process the RIGHT way, it’s crucial you get pre-approved before you start looking for that *perfect* home.

Pre-approved means you’re verified by the bank – it’s basically proof that you can handle a loan – and if you don’t have this document, you will NOT be able to put in a serious offer on a property…

So you could find the perfect home… at the perfect price…

But if you don’t have this document ready, you’ll have to wait to be pre-approved, meaning someone else could snap up the home you’ve set your eye on.

Relocation Mistake #2: Not Having a Concrete Plan

Of course, having a plan in place is something almost anyone does before even contemplating a move – but to make the move as hassle-free and easy as possible, it’s vital you have a proper plan in place so that you can find your perfect home fast.

For example, you may NEED 3 bedrooms… but you envisage your perfect home as having 4. Sure, it’d be nice – but is it a priority?

Build yourself a clear property profile that outlines exactly what you NEED… and what you WANT… and then look for a home that fits all of the “Needs”, with any of the “wants” being added bonuses.

This not only helps you refine the choice you’ll be faced with, but it’ll also help your realtor and loan officer hasten the process so that you can get the ball rolling as quickly as possible.

Relocation Mistake #3: Lying on a Mortgage Applications

This is hands down a complete no-no… regardless of how “small” the lie you may tell.

Lying on a mortgage application is a federal crime, and almost always results in jail time, along with a hefty fine – and your home is also likely to be repossessed.

Now, you may be reading this thinking “I’d never lie… that’s not something I need to worry about”

But even things as simple as stating your new home is going to be your primary residence – when it isn’t… or not being transparent about where ALL of the down payment money comes from counts as lying…

So ALWAYS, ALWAYS be honest with your realtor and loan officer.

The consequences of not doing so are severe.

Relocation Mistake #4: Not Understanding Mortgage Terms

You don’t need to become an expert in mortgage contracts or study like a realtor, but it does help to have a strong grasp of how mortgages work… and the various terms associated with them.

One common mistake made by relocating physicians is thinking that a deposit is the same thing as a downpayment. This is simply NOT true, and just because you’ve put down your deposit, it doesn’t mean you should go and spend your down payment.

This is just one example – but it’s a good example of why a basic understanding of your mortgage will enable you to enjoy a stress-free, more fluid move.

Relocation Mistake #5: They’re Too Careful

You find a perfect home, at a perfect price…

But for whatever reason, it’s just not quite right.

Or, it’s just a tiny bit more than you wanted to spend…

These are, of course, valid points to consider – and your new home is where you and your family will live… of course, you want it as perfect as possible…

But the fact of the matter is that today’s housing market relies on decisiveness. The people getting the best homes, at the best prices actively make offers… get pre-approved for mortgages…

And they don’t wait around ‘thinking’ for weeks on end, only to find their dream purchase has been snapped up.

It’s always wise to be careful… but avoid being too careful, or you could find yourself delaying your move by months, if not years.

Here at Physician Banks, we understand the stresses associated with moving, and that’s why we offer relocation services exclusively for physicians.

There’s no charge for our services – we recoup them from realtors – and you could earn up to $3,000 cashback just for using us…

Interested in learning more? –> Click Here

First Home 3 Things to Remember

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Buying Your First Home as a Physician: 3 Things to Remember

So, you’ve qualified as a physician, and can’t wait to leave your residency and start your practice. You’ve been offered an amazing position… and all you need now is somewhere to live! For many, this is their first home.

Whether you’re a house-buying novice, looking to practice as a physician in a new city, wanting to get your step on the property ladder or an experienced physician who owns a clinic – but who wants a change of scenery – the same rules apply when it comes to relocation.

You must find a balance between affordability, availability, and suitability.

Affordability

Generally-speaking, as a physician, you’ll be able to afford a bigger house than most. However, just because you may find yourself in a higher income bracket than the average American doesn’t mean you can just choose any home you want, and assume you’ll get approved for a mortgage.

After all, mortgage guidelines (although rough) follow the principle that you can borrow up to three times your total annual income. (Couples benefit here, by being able to combine their incomes to increase the mortgage amount.)

Of course, that may sound like good news – and for many physicians; it is.

However, there’s no point taking a mortgage on your perfect home, if it’s going to leave you sacrificing most of your monthly income on mortgage repayments.

A good guideline is to aim for your monthly mortgage repayments to be no higher than 40% of your net monthly income. This ensures you can comfortably make your repayments, while also giving you plenty of leg-room for savings, home-improvements… or building your nest egg for your golden years.

Availability

Once you’ve got a realistic idea of what you can afford – both in terms of your own cash you’ll be putting towards the purchase of your home – and the mortgage loan you can afford – you need to determine if the home you want, is actually available in the location or neighborhood you want to live in.

More often than not, you’ll find yourself having to make compromises on at least some of your “must haves” and “must avoid” when it comes to finding your first home… so be prepared to be somewhat flexible, as this will enable you to find a home faster, and easier.

Searching for your first home can seem like venturing into a large jungle, with nothing more than a penknife; however, there are a few methods you can use to ease your search, and one of the most effective (and easiest-to-do), is to browse internet forums and message boards like Reddit.

Unless you have your sights set on a remote town with a population of 100, there’s a near-certain chance you’ll find questions from people online, asking what the areas are like, what it’s like to live there and so on.

This type of research can give you a good starting point – and once you’ve settled on your area (or areas), then you can begin actually looking for houses, thanks to the narrowed-down range you’ll now be dealing with.

Suitability

Once you find a home you like the look of – or, in most people’s case – a few properties you’ve “shortlisted”, it’s time to decide which is the most suitable.

Before deciding either yes or no, you need to weight up a number of factors:

Work Accessibility: Is the home near enough that you could comfortably commute each day to your new place of work? Is there public transport you can use, or would you need to drive?

Local Facilities: Are there shops nearby? How about restaurants, parks, and cinema complexes?

Crime: What’s the local crime rate for burglary? Have there been higher-than-normal violent crimes recorded in the near vicinity? Is there a likelihood of gang activity?

Schools: Is the nearest any good? If you already have your eye on a school – is the home you’re looking at in the catchment area? What do the average grades look like?

Parking: Is there off-street parking available? If not, but there is on-street parking – is it a busy road? Is it likely you’ll struggle to find a space when returning home from work?

Some of the points above can sound a little anal – and in some ways, they are. But what you’ve got to remember is that buying a home is no small decision. Buying your FIRST home is an even bigger feat.

Combine that with the fact you’ve moving to a new, unfamiliar area…

And it’s not hard to see why taking your time is advisable.

Want a Simpler Way To Relocate and Buy Your First Home?

  — Get in touch with us here at Physician Banks.

We’re a service dedicated to helping physicians relocate to new cities or states – regardless of whether they’re being a home for the first time, or if they’re already a homeowner – and we can take ALL of the hard work out of choosing your home.

 

We’ll help connect you with loan officers (so you can get your mortgage quickly, at a great rate)… we’ll do the house-search ourselves, in conjunction with our nation-wide collective of realtors (before presenting you a shortlist for you to look through…)

 

And we’ll help you at every step of the way – ensuring your move and purchase is as smooth, simple, and hassle-free as possible.

 

Best of all?

 

There’s No Charge For Our Service.

 

We recoup our fees from realtors… and as a special “thank you” for working with us, we’ll even give you a cashback figure up to $3,000, when you close your new home!

 

To find out more, and schedule an informal, no-obligation phone chat CLICK HERE

Beginners guide physician home loans

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Physician Home Loans: A Beginner’s Guide

So, you’ve finally completed your studying to become a physician. You’ve spent the last few years of your life pouring over books in the library, while you’ve seen your friends progress in their careers and become homeowners…

And now, you can’t wait to get on the property ladder yourself and purchase your own home.

You probably already have a solid idea of how much you want to spend on your home, and where you want to live… and the next step is to look at the various ways of financing your home.

If that’s you, you’ll probably have heard of physician home loans; and in this post, we’ll look at how these loans work… how they compare against other loans… and whether or not a physician home loan is right for you.

Physician Home Loans: What Makes Them Desirable?

Physician home loans typically offer a range of benefits that regular mortgages and loans don’t offer, and some of the major features include:

  • Zero (or a very small) down payment required…
  • No “PMI” (private mortgage insurance…)
  • No chance of rate-growths on jumbo loans…
  • A lending decision is made based on your signed employment contract…
  • Student debts play a much lower factor in determining your eligibility…

So, in short, a physician home loan is a much more viable method of getting a mortgage, than were you to go down a conventional route of borrowing.

Who Can Take Out a Physician Home Loan?

While the exact requirements vary from lender to lender, qualified borrowers typically include someone who’s a medical resident, practicing (or soon-to-be) physician, WITH a signed employment contract), along with – occasionally – dentists, veterinarians, and other types of doctor.

Physician Home Loans VS Conventional Mortgages

Now that you have an idea of who’s eligible for a physician home loan – and why you may want to consider one, if you’re looking to purchase your first home – let’s look at why they’re an attractive option when pitted against conventional mortgages.

First off, let’s consider the three main costs associated with mortgages:

Interest: All mortgages will have interest attached – and this is based on the interest rate, the loan balance, and the repayment time-frame.

Closing Costs: Closing costs are a one-time fee, paid at closing, which is generally wrapped into the loan balance.

PMI: PMI is the monthly fee you pay, required – generally – until you’ve reached 20% equity.

Closing costs and interest rates tend to go hand-in-hand when it comes to cost. For example, you can lower the closing cost… but doing so will generally increase the interest rate, and vice-versa.

PMI can be avoided by putting 20% down up-front, although some loans – as is the case with most physician home loans – allow you to avoid PMI before you’ve reached 20% equity.

Of course, if you’ve no cash to put down, that leaves you with limited options – so what are your options for a mortgage without PMI?

The following is some of the most common ways to avoid PMI:

  • Physician Mortgage Loans: 30 yr or 15 yr fixed rate
  • Physician Mortgage Loans: 1-10/1ARMs
  • Conventional 80/20: wide variety of terms available
  • First mortgage (80%)- Traditional terms paired with a Second (5-20%)–Interest-only HELOC 
  • VA Mortgage (military eligibility required): 30 yr fixed rate 

Physician home loans can carry a higher rate of interest or closing cost, but the major benefit is that it’s is extremely flexible to the pitfalls physicians are facing with school debt and logistics. 

The physician home loan will likely be the most suitable option for you, if you’re planning on living at your new home for 0-7 years; if you’re buying with the intention of long-term living (staying there for 7 years or more), then the physician home loan with the 30-year fixed rate or the 80/20 option would likely be more suitable.

But, of course, this doesn’t include any closing costs – and that’s something you should bear in mind of course.

Conclusion

As you can see, physician home loans carry their own distinct array of advantages and disadvantages.

Generally-speaking, unless you’re planning on purchasing a home for short-term living (less than 5 years), they’ll tend to work out more affordable than conventional loans… and this becomes even more apparent when you’re able to put down an amount of cash upfront.

As always, it’s best to speak with a mortgage specialist who can walk you through the various options available to you – but the above should give you a solid understanding of the fundamentals associated with physician home loans, and whether or not one would be right for you.

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