Loan Talk

Physician Loan Rates Lower

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Great news! Physician loan rates lower nationwide and near all time lows., which puts out a weekly mortgage-rate-trend index, found that more than half of the experts it surveyed say they think rates will fall in the coming week. Greg McBride, senior vice president and chief financial analyst at, is one who is predicting rates will go down. “The Fed didn’t raise rates, and despite sending a strong signal that a rate hike is coming, they don’t expect core inflation to hit 2 percent until 2018,” McBride said. “All this is good news for long-term bonds, and by extension, mortgage rates.”

Mortgage rates moved slightly lower this week, according to the latest data released Thursday by Freddie Mac. While this is good for now better rates may be on the near horizon moving forward.  However, The Feds now expects rates to be about 1.1 percent by the end of 2017, down from June’s forecast of 1.6 percent. Those moves could lead to lower long-term bond yields, which would favor lower mortgage rates.

In its monthly outlook released earlier this week, Freddie Mac predicted that this year will be the best year in home sales since 2006. It expects mortgage rates to remain low with the 30-year fixed rate, the most popular mortgage product, on pace to average 3.6 percent this year. That would be the lowest annual average in 40 years, surpassing the previous low of 3.66 percent set in 2012.

“The housing market remains a bright spot for the U.S. economy, with solid job gains and low mortgage interest rates sustaining the economy’s momentum in September,” Becketti said in a statement. “In most markets, low mortgage rates have more than offset the rise in house prices, preserving homebuyer affordability for the typical household. Homeowners are also taking advantage of low rates and house price appreciation that is increasing their home equity. The share of cash-out refinances grew to 41 percent in the second quarter of 2016, compared to 38 percent in the first quarter and 15 to 20 percent during the housing crisis.”

All of this adds up to huge savings on a 30 year mortgage rate. Enjoy!

Pickpocket stealing a mans wallet

PMI and The Physician Mortgage

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Pickpocket stealing a mans wallet

PMI Physician Mortgage

Does the physician mortgage have PMI?

What is PMI?

How much could PMI really cost?

We get these questions on a daily basis.  Here is the skinny on all things PMI and the physician mortgage.

What is PMI?

PMI (private mortgage insurance) is normally part of any mortgage loan if the buyer has less than 20% equity in the home. For those new to the home buying process, that means if you put less than 20% down on a house, you’ll pay a monthly premium for PMI. This additional cost for mortgage insurance protects the lender’s investment if you fall behind on your monthly payments and default on the loan.  PMI initially costs upwards of 2% of the entire borrowed amount. This is paid in full at closing.  Then up to 1% annually every year until the balance of the loan is down to 80%. Rates charge for PMI vary but not much based on the downpayment and program used to attain your loan.  Here is what that means to you in terms of dollars- $250,000 home with zero down upfront PMI cost paid at closing would be $5,000 with $208 monthly premium included in your monthly mortgage payment. Oouch! that really starts to add up fast.  You can find actual rates for PMI from MGIC here.

Physician Mortgage and Private Mortgage Insurance

GREAT news! Physician mortgages are a specialty mortgages.  The banks which underwrite these loans do not require PMI.  Saving you thousands of dollars per year and tens of thousands of dollars over the life of your loan.  Now that you have educated yourself on the cost behind the jargon-Click here to see all the lenders in your state!

Understanding Loan Approval Amounts

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Understanding Loan Approval Amounts

At the start of a home search, one of the most pressing questions on the minds of borrowers is how much can I be approved for? While it is a simple and straightforward question, the answer can be very convoluted, leading to a universal, it depends. Understanding what the lender is looking for will help you gather the right documents to help the lender approve you for the highest possible loan amount.

Factors Lender’s Consider

  • How much do you make? This can be a clear answer if you make a salary, work at a hospital or have another form of guaranteed income. Income that is reported through a w-2 and/or listed on a contract is generally accepted as proof of income. If you have a partnership or are working under self-employed status verifying and proving income can be more complicated.


When your income is guaranteed it is always counted by the lender. When your income is variable in the form of bonuses, performance incentives, or other factors that are paid out irregularly, the lender may or may not count the income. This can be a significant part of your pay structure, depending on how your practice is set up. If you are starting a practice or just out of residency, negotiating a guaranteed income will go a long way to simplifying the loan approval process.


It is also important to note that lenders use your gross pay to calculate income, before anything including taxes are taken out. This can be an important distinction because if you are investing in your retirement aggressively you may have a lower take home pay, and therefore may be more comfortable taking out a lower loan than the bank will approve you for.


  • How much do you owe? The next big question is looking at your debt. For physicians the student loan piece can be the largest portion of accumulated debt. What is counted is all debt that is reported to the credit bureaus. This generally includes any vehicle loans, student loans, credit card debt and so forth. The lender will count the minimum payment on the debt towards the total debt payment.


Many borrowers find that if you sign up for the income based payment on your student loan debt the loan payment will be at the lowest possible amount. You can make additional payments each month depending on your ability, but having the lower minimum payment will help increase your loan approval amount.


  • What is the debt to income ratio? After determining your debt and income the lender will then calculate your debt to income ratio and that will determine the approved loan amount. This ratio is set at around 43%, as the highest amount a bank will lend against. The specific ratio will be determined by the loan program you choose and your credit score, down payment, assets and the strength of the overall application.

Strong applications may see exceptions for a higher debt to income ratio. Lenders will add in the new mortgage payment with current debt to determine the maximum debt to income they are comfortable lending against.

Physician’s loans offer generous terms in the form of low down payment, waiving of mortgage insurance payments and other incentives to help you get approved for a larger loan amount. A review of the debt listed on your credit report and a review of your income and how it is structured can also go a long way to increasing the approval amount.


Does the Fed Rate Hike Effect Me?

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Wednesday, for first time in 56 meetings spanning nearly ten years, the Federal Open Market Committee (FOMC) voted to raise the Fed Funds Rate from its target range near 0.00 percent.

The Fed Funds Rate is now 0.25%.

The group also added that additional rate hikes are likely throughout 2016 because the jobs market is showing signs of staying power and business investment is increasing.

The economy may not be without fault, the Fed acknowledged, but the group is keen to get ahead of inflation, which can negatively affect the economy.

Inflation is the devaluation of a currency, which leads to rising prices. The Fed prefers to see inflation running at two percent annually, but it’s been much below that target for the better part of this decade.

The Fed believes that the contributors to low inflation — namely, falling energy and commodity costs — will soon subside and prices will begin climbing.

An increase in the Fed Funds Rate helps the Fed to fight against inflation, and the Fed is looking far into the future.

The Fed statement included the following (emphasis added):

Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent. The stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

In plain English, this says that the Fed is doing the absolute minimum to slow the economy. The group is making only an incremental change in the Fed Funds Rate; and it’s keep an otherwise “accommodative” monetary policy.

The Fed wants to see additional labor market gains and believes that inflation rates are still a bit too low.

The statement also show that Fed is aware that changes in monetary policy can take a long while to work their way through the economy — sometimes three quarters or more.

The change in the Fed Funds Rate, therefore, won’t be fully felt by businesses and consumers until sometime in late-2016.

The Fed is planning ahead.

Does the Fed Rate Hike Effect Me?


A little bit over a year ago, after the group’s October 2014 meeting, Federal Reserve announced the end of its third round of quantitative easing, a program known as QE3.

QE3 had been running for over two years.

Via QE3, the Federal Reserve purchased $85 billion in long-term bonds monthly, which included a hefty amount of mortgage-backed securities (MBS).

In buying mortgage-backed securities, the Fed boosted aggregate demand which, in turn, caused MBS prices to rise; and, when MBS prices rise, current mortgage rates fall.

The start of QE3 heralded an era of unprecedented low rates and sparked a refinance boom nationwide. HARP 2 loans surged as homeowners flocked to the various streamline refinance programs.

Home purchase activity increased, too.

Today, in many markets, and in large part because of QE3, home values have recovered all of the value lost during last decade’s downturn and they continue to make strong gains.

Since QE3 ended in 2014, though, current mortgage rates have been slow to rise. This is because the Federal Reserve continues to reinvest in mortgage-backed bonds.

This excerpt from the Fed’s December statement explains it all:

The Committee is … reinvesting principal payments from its holdings of … mortgage-backed securities … and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy … should help maintain accommodative financial conditions.

This means that the Fed is continuing to support low mortgage rates nationwide — even though its qualitative easing programs have ended and are retired.

The Fed will keep buying MBS, and interest rates will continue to be suppressed; and, that’s going to be good for consumers.

Mortgage rates have moved lower after the Fed’s December meeting, but based on the central banker’s plan to buy bonds, rates should remain low into the start of 2016, at least.