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The Truth about the Physician Home Loan

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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.

Highest Rent in the USA

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How much rent would you pay to live the city of your dreams?

We all know some cities are just expensive…But how do they compare?  Below is a list of the most expensive rent by city compiled together by apartmentlist.com as of March 2016.  All rents are the median price for a two bedroom apartment. Enjoy!

Nationwide Median Rent  – $1,300

  1. San Francisco, CA – $4,780
  2. New York, NY – $4,450
  3. Jersey City, NJ – $3,080
  4. Washington D.C – $2,990
  5. Boston, MA – $2,900
  6. San Jose, CA – $2,640
  7. Los Angeles – $2,630
  8. Seattle, WA – $2,390  
  9. Stamford, CT – $2,380
  10. Miami, FL – $2,000

Remember to keep the cost of renting and living expenses in mind for your next step in your medical journey.  That huge offer you received might not be as big as you first thought! Of course there are significantly more things to consider than just cost vs income.  

New Year’s UN-Resolutions

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#physicianbanks

During this fun time of the year we had some time off to drink way too much bourbon, reflect on how the year went, and plan what we want to get out of 2016.

Knowing where you want to go helps you get there. Imagine trying to drive to a destination without knowing where it is. Yeah … not so easy.

Your time is fixed and you won’t get it back. If you’re living your life “conditionally” aka you say “I’ll do this later when…” you should seriously re-evaluate what you’re doing. It’s important to realize our time is limited on earth. We must STOP doing things to make room for the goals we’d like to accomplish.

What if I wait until next year to buy

By | Life Coach, Loan Talk | No Comments

First-time homebuyers are flocking to the housing market in greater numbers than any time in the last few years. Renters who are ready and willing to buy are now realizing that they are also able to as well. Many first-time buyers are Millennials (born between 1981 – 1997). What if I wait until next year to buy?

If you are one of the many in this generation who sees your friends and family diving head first into the real estate market, and wonder if now is the time for you to do the same, keep reading!

The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.

Let’s look at an example of what the experts are predicting for the upcoming year, and what that really would mean for you. Let’s say you’re 30 and your dream house costs $250,000 today. Right now mortgage interest rates are at or about 4%.

Your monthly mortgage payment (principal & interest only) would be $1,193.54.

But you’re busy, you like your apartment, and moving is such a hassle. You decide to wait until next year to buy. CoreLogic predicts that home prices will appreciate by 5.1% in the next 12 months; this means that same house you loved now costs, $262,750.

Freddie Mac predicts that over this same period of time, interest rates will be a full point higher at 5.0%. Your new payment per month is now $1,410.50.

The difference in payment is $216.96 PER MONTH!

That’s basically like taking $8 and tossing it out the window EVERY DAY!

Or you could look at it this way:

  • That’s your morning coffee everyday on the way to work (average $2) with $10 left for lunch!
  • There goes Friday Sushi Night! ($50 x 4)
  • Stressed Out? How about a few deep tissue massages with tip!
  • Need a new car? You could get a brand new car for $217 a month.

Let’s look at that number annually! Over the course of your new mortgage at 5.0%, your annual additional cost would be $2,603.52!

Had your eye on a vacation in the Caribbean? How about a 2-week trip through Europe? Or maybe your new house could really use a deck for entertaining. We could come up with 100’s of ways to spend $2,603, and we’re sure you could too!

Over the course of your 30 year loan, now at age 61, hopefully you are ready to retire soon, you would have spent an additional $78,105.60, all because when you were 30 you thought moving in 2015 was such a hassle or loved your apartment too much to leave yet.

Or maybe there wasn’t an agent out there who educated you on the true cost of waiting a year. Maybe they thought you wouldn’t be ready. But if they showed you that you could save $78,000 you’d at least listen to what they had to say.

They say hindsight is 20/20, we’d like to think that 30 years from now when you are 60, looking back, you would say to buy now…

Thanks to KCM for the blog post.

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