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 McDonalds to 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 counter act that resentment. EVERYBODY loves the feeling of buying there 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…