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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.

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.

How Physicians Can Get Out Of Debt

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How Physicians Can Get Out Of Debt

Get out of debt…One of the biggest factors that prevent us from succeeding in life, and living up to our full potential, is fear. Fear of the unknown. Fear of the present. And fear of the future.

Fear itself is nothing more than an emotion – but often times, there are physical reasons behind us experiencing fear – and one of the biggest underlying factors is debt.

Most of us will have been in or experienced debt at one point in our lives, and it’s not nice. However, the way the world works means it’s commonplace for many people – and if you’re a physician in debt… and if you want to free yourself from the confides it entraps you within…

Then make sure you read this post in full, as we’re going to share a few ways you can get out of debt, easily, and quickly.

#1 Change Your Mindset

One of the most common reasons for continual debt is a lack of positive thinking. It may sound cliche – and almost unrealistic – but you’d be surprised just how many people confine themselves to a life ridden with debt, simply because they can’t shift the feeling of being in debt.

The way you approach the situation will play a huge part on how it unfolds in the future – and if you’re wanting to change your circumstances, and become debt-free, it’s vitally important to take a positive, proactive approach, rather than one where you feel sorry for yourself.

Just by reading posts like this, you’re showing that you DO want to change things – and that’s one of the most important steps. Take some time to yourself every day to appreciate what you do have – and focus on solving your problems, rather than allowing them to take over your life, and engulfing your chances of succeeding.

#2 Public Service Loan Forgiveness

This option is ideal for those who want to pay for their study, but who don’t want to pay the loans back themselves. The best-case scenario is that you realize this before you go to med school – and one of the best methods in this situation, is to take advantage of the military HPSP scholarship. Of course, that requires you to serve in the armed forces – but it can be a great way to study, without racking up large debts.

Of course, if you’re already in debt that’s not really going to help – and public service loan forgiveness can help you if you’re already in debt. In order to qualify for PSLF, you simply need to stick around as faculty in your program for a while. Head to your VA to work (you’ll be able to get a job there a LOT easier than you think), or even find a non-profit, non-academic employer in somewhere like California.

It won’t be for everyone, but for those who it is suitable for, it can be a great option.

#3 Grow Your Income

Just because you’re in debt, doesn’t mean you have to settle for one wage.

If you can realistically manage too, it can be worth picking up a second, part-time job alongside your work as a physician, just to get some extra income coming in each month.

Sure, it’s not the most glamorous lifestyle – but the harder you work now, the more you’ll reap the rewards later on in life – and whether it’s picking up a few extra shifts, or simply doing some weekend work, increasing your income – even just by a small amount – can allow you a LOT of extra room each month to pay pills and clear your debt.

#4 Live To Your Means

We all like the idea of living a lavish, comfortable life – and while, as a physician, you’re very likely to enjoy a high-quality of life a few years down the line, if you’re in debt TODAY, then it’s crucial you live in a way that’s suitable for your budget.

If you find yourself in uncontrollable amounts of debt, then cut back on your purchasing for a few months. Eat out less, and spend more time making your own food. (You’d be surprised how much most people spend on takeout and dinners every month.)

Consider delaying expensive purchases – and tell yourself that once you’ve cleared a significant chunk of your debt, you will be able to buy these things – but it’s much better to clear the debt first so that you can actually enjoy them.

If you opt to go down this route, then it’s worth pointing out that you don’t have to live frugally; just be careful, and make sure to budget each month, so you know exactly what you can, and can’t afford.

#5 Work Hard!

Whatever your current situation is, it’s worth remembering that there is ALWAYS a brighter future ahead – and the way in which you can work toward that future is by working hard.

Don’t think that just because you’re in debt you’re going to be confined to it for years to come. The harder you work now, the quicker you’ll alleviate your debt problems, and the sooner you’ll be able to become financially secure once more.

Like we’ve seen in this post… if you need to get a second job or take on extra hours to boost your income… there’s no harm in doing so.

If you want to look into ways of clearing your debts, then do so.

The most important thing to remember – this is YOUR life – and the quicker you begin making proactive changes to better your situation, the sooner you’ll find yourself on the up, and able to get out of debt, and into a lifestyle where you’re happy, comfortable, and money-worry free.

It can also be worth seeing a specialist debt advisor if you feel as though things are becoming a little too much of a burden – and they’ll be able to work with you on action plans to rid all of your debts.

Don’t be embarrassed by debt – and don’t let it affect your chances of living a wealthy, prosperous life. Take action NOW, and you’ll find things improving a lot quicker than you probably envisage.

There’s also the option of refinancing – and while not suitable for everyone, if it’s something you’ve looked into, and would like to learn more about, then you can get in touch with us using this link, and we’ll show you if we’re able to help!

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