Resident Mortgage Loans

I just want to see if I understand what I've been reading about the residency mortgage loans. It sounds like, if you are going to a state that is served by BOA, then that is your best bet because there is no origination fee. If your not in one of those ~20 states then maybe go with physicianlenders.com. Is that right?

Also, does anyone know if BOA factors in student loan debt in determining how much they will lend you. I'm looking at a pretty hefty loan payment (>$700 per month), but apparently I don't owe "enough" money to make it deferable during residency. That debt is really going to reduce the amount I am loaned if it is factored in. Anyone have any suggestions?

One last thing about BOA--you have to have a credit score of >740 in order to qualify for the loan.

I have been thinking and talking to people about I/O loans and one advantage is it gives you the ability to pay as much or as little principal as your budget allows. Additioinally, many times you can get the same rate as for a std 5/1 ARM, or 7/1 if you prefer. This allows a little more flexibility if you are in an expansive city.

Crackbone

13 hours, but who is counting?

i didn't think about location changing the rate, you are probably right. that I/O is tempting, but i guess it is safer just to start paying off the mortgage and building up some equity.

Emm280,
OrthoDoc hit the nail right on the head re: I/O loans. Also, I agree about the 1% origination point being >>> $25, but BOA is not available from the place I am anticipating ending up. Also since physicianlender is free to inquire, you might as well check w/ them even if you plan to use BOA. Another thing I am unsure of is if the rate I was quoted is specific to the certain state in question and the BOA rate is for another state (apples and oranges?) I plan to simply ask M. Smela if he can match BOA's rate.
I hope this thread is not lost after results come out in....14hours!

I would do your best to avoid paying interest only. The housing market may burst on you at some point and the price of your house may fall leaving you owing more money than you can get out of your house.

In addition, deducting the interest does not add up dollar for dollar. You may only "save" yourself around 25-35% of it on taxes. So you'll still be out the majority of the interest just like rent.

It would be better to have some equity saved up in your house so you have a least a little money to put down on your next house when you start practice.

Piggy - thanks for the info on physician lender,
it seems to me that 1% is a nice chunk of change when you are talking about $200,000, I'm not very good at math but I'm pretty sure that is a bit higher than the $25 application fee for BOA, also, if I got a quote of 5.1-5.2% than doesn't BOA sound better? Except for the fact that it doesn't cover as many states? Am I missing something here? I'm new at this so maybe I am. Could you keep me updated on what rate you get from him. But it seems we can do better than 5.5%.

One other thing, this I/O mortgage is just paying back the interest, correct, which is tax deductible, right? So if your house doesn't appreciate, you won't make any money, but the house shouldn't depreciate. And so say it did stay at the price you paid 5 years later, you would basically be living in a house without paying rent, just interest (which is tax deductible) and the taxes on the house. What is the disadvantage.

Thanks for your help.

He told me he had just checked on rates and for 5/1 ARM -30 yr (not I/O), the rate was low-to-mid 5's (less than 5.5) and just over 5.5 for 7/1 ARM. I/O can get you in trouble if house does not appreciate and will have a higher rate so I am staying away. My understanding is that he will continue to shop for rates until the moment you are ready to lock, and that is why he can't give a DEFINITE rate.

What rate did he give you. Are you looking at 5 yr ARM, I/O, 30 yr? What? He said that he was renegotiating his credit union lenders currently, and thus has been holding out on me. He said he was hoping to blow Bank of Amercia out of the water.

Mike Smela w/ physicianlender.com --mention orthogate
(866) 375-6269

He has been fantastic in getting me pre-approved in last 2 days so the old lady and I can look at houses this weekend.

-100% loan (no money down)
-student loans ignored in debt ratio
-No PMI
-1% origination fee
-Loans up to $365K

This origination fee or "point" is payed at close and seems to be only difference from Bank Of America's package.

HOWEVER, physician lender has two advantages:
-offered in more states
-NO application fee, whereas B.O.A. has a $25 application fee just to run your numbers even if you don't go w/ them and physicianloans.com has $250 app. fee!

I sent a quick e-mail to the Bank of America people about the medical residents mortgage they offer and the woman sent me back an e-mail giving me a little info. I have to send her my info for more specifics but she basically wrote this:

Rates change every day...currently most residents go with a 5 or 7 year arm depending on the length of residency. The 5 year arm today with no points or origination fee is 5.125 and the 7 is 5.375%.

They offer 100% loans with no PMI or origination fee.

Her name is Suzy Savod - [url=mailto][email protected][/url] , her phone number is - 1-866-810-4404

What do the physician lender people offer? Is it comperable or bettter than this offer? How much money were they willing to loan? Has anybody else came up with a better plan for a mortgage?
Thanks.

Bank of America is offering loans in 22 states only still. I think I am headed to Utah, and they couldnt offer me anything there. However, there are other good companies, including Mike Smela at physicianlender.com that offer a very good program still. I think I am going to do a 5 yr ARM, possibly I/O. I have talked to about 5 companies, including my current lender Wells Fargo (who werent that great). I tell them straight up that I will be a resident. I have no pay stubs. This is what my salary will be. I will NOT be willing to pay PMI. Several have said, "no problem." So far, Mike Smela looks like the best deal so far. Make sure you dictate the conversation. If they start blowing smoke up your horn, tell them that you have better offers. They do deal with you. You have to act like you know what you are doing. I also have heard from some guy (he told me to have others ask specifically for Scott Jacks - haha!) at physicianloans.com that has this dea if you are interested at all (only in 20 states, not in Utah):
- No Money Down
? No PMI
? Student Loans Not Counted in Your Debt Ratios
? Great Rates
? We Allow you to close on the loan up to 60 days before starting residency or practice
? We allow loan amounts from $100,000 to over $500,000
? We offer this loan in 20 STATES

What's The Catch?
You must be an M.D. or D.O.

go to another bank.

mortgage lending is a business, a profitable one at that, and you will surely have no problem securing a loan with a reputable company with 2 md's on the mortgage.

if they mention the pay stubs, just have your program director's office fax/mail to them a copy of your contract (that is what i did). also, you can say things like "i won't forget this favor" implying that when it comes down to buy a property with attending money, you would go back to that guy.

either way, with a five-year guaranteed (practically) contract, i don't think you'll have a problem. at the very worst, you might need a guarantor.

if you match in nyc, i'll give you the name of our guy.

Interested in a mortgage, but was told that we needed 30 days of pay stubs before closing. Since my SO and I are both graduating, neither of us have worked for a few years -- no pay stubs. Would really rather not have to move twice, and wouldn't really want to wait that long to move. Does anyone have any experience with this, or know of a lender that may waive that requirement.

Any info would help. Thanks.

my current loan is from citibank. i am in ny (hello again howzit) and for a co-op un the upper east, my wife and i were able to get a jumbo interest only loan (all we could afford) for 5% on a 5 year ARM.

this may be because we had her father as a guarantor on our loan, and beacuse my wife makes more money than me, and as a couple, we don;t do half bad.

if you want, i can pm you the name of the guy we used at citibank. we were actualy looking to refinance, but with the closing fees, it owuld be a wash. the rates we got last week were 4.875%.

I want to renew this discussion,

Anyone have any additional input on mortgage loans for residents?

I searched the Bank of America website and was not able to find anything about "MD Loans". Assuming this program still exists can it be utilized by NY State residents?

Any other major banks?

Thanks for the input.

Howzit
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PS - Good luck to all the current applicants.

after all my research into this, i ended up going with physician lender.....great guy named mike (owner) knows all the ins and outs about residents........no money down, no points, no PMI....5 year ARM with interest only payments since it is really only a five year investment, the goal was to keep my monthly payments down and more money in my pocket because i really won't be building that much equity after 5 years...plus with interest only, its tax deductible...

i got in at a slightly higher interest rate because my credit score sucks royally after living off credit cards for the last 4 years....but i talked to a few other places who could beat the interest rate but couldn't offer no PMI.....they out right told me that my monthly payments would be higher if i went with them even though they offered a lower rate because the PMI costs more than 1 or 1.5% higher rate.....anyway, i think i made out alright......if anyone is interested, its physicianlender.com.......

Just a couple of things to add. Hopefully you guys have already secured loans and houses by now.

As far as loans go, I know Bank of America is offering the no PMI this year. Compass Bank was offering it last year (not sure about this year). As previously said, there are also plenty of local banks that offer no PMI to physicians. Just do some research. Bottom line, I think, is to find some loan that has no PMI. It really makes a difference.

Some people have mentioned Balloon loans and others arms. Either way, do it for 5 years. You'll get a much better rate and you're not going to want to live in the same house after you graduate even if you stay in the area. I preferred an ARM (Adjustable Rate Mortgage) to a Balloon (large sum due after 5 years), just in case I had problems selling my house. With an ARM, the rate only can go up by 1% per year. With a Balloon, you have a huge payment to pay after 5 years.

As far as FHA, I wouldn't recommend it. You won't be able to find no PMI and usually it has to be a 30yr conventional instead of 5yr ARM (which means higher rate). There are also many hidden fees and paperwork for both you and the seller. It also makes it less attractive when you try to sell your house (again more paperwork and hidden fees). The only advantage is that the loan can be assumable by the buyer when you sell (advantage if the rates go up over the next five years).

I would recommend buying a house if at all you can afford the payments. It really is an investment, especially since you will be in one town for 5 years. My house has already increased in value by $20,000 in just one year.

If you guys have any other questions or need help finding a house or getting a recommendation for a real estate agent in your area, you can e-mail my wife. She works with Physician Relocation services. Her e-mail is [url=mailto][email protected][/url]

If some of you are having a difficult time getting loans through services, make sure you talk to the local banks where you are going(not the national chain banks). Some smaller local banks are more willing to cut you some slack b/c they know you will be there for five years making X amount of dollars. They won't be as strict on you fitting the mold to qualify for a mortgage. They are usually more willing to loan you the money for a down payment and may even let the mortgage insurance slide as well. I had about $100000 in student loan debt, and they didn't blink an eye. We went with a five year balloon with payments as a 30 year amortization. When the balloon was up, my residency was over and we sold the house.

We also had a hard time finding a house due to a hot market, so we went with a new build (spec home) through a quality builder. We had no maintenance issues during the five years. We did have to sink a little money into landscaping, but not a whole lot. However, one of my residents bought an older home and fixed it up over five years, added a garage, and turned an excellent profit, nearly doubling the value of the home.

If you go with a new build, try to sink as much as possible into the mortgage such as appliances, if they are not included, window coverings (drapes, etc...) and also slip in the landscaping if you are able.

If you choose a new build, then make sure you know what you are getting. Make sure you ask about outlets, lighting, phone lines, cable lines, etc.. Many builders will build a basic house, but not put in a lot of overhead lighting which means you rely on lamps in many rooms. They usually give you x amount of phone and cable jacks. I would suggest that you make sure there are overhead lights of some kind in every room. Make sure they are compatible for ceiling fans and have them wired for ceiling fans, especially in upstairs bedrooms. Place a phone and cable jack in each room. Make sure there are outside outlets on the front porch for yard tools, and christmas lights, and outside outlets out back on the deck and patio for yard tools and stereos. Make sure there is outside faucets both front and back.

Dont' buy a corner house, at least if you are going to a cold weather climate. That will be twice the amount of sidewalk shoveling as any other house. Try to get a walk out basement, but you don't have to finish the basement. Make sure there is a rough-in for a future bathroom in the basement. Also, add a fireplace in the colder climates, it will be more appealing to buyers when it's time to sell. Most fireplaces are gas now, but if you get a wood burning fire place, put in a gas starter.

Just some thoughts.

Rates are climbing folks - so if you get preapproved - lock in your rate!

You can qualify for FHA loan for a townhouse/condo - but they have
to be FHA approved - not all developments are. You have to ask the builder or condo association about this option.
For those of with a substantial student loans - this is almost the only
option to get approved with a decent rate - and low down payment.

Someone above mentioned landscaping etc - nice thing about a town
house is that you pay a association fee of like $115 (for the house i'm
looking at) that covers the water, all exterior maintence and insurance
on the property! So this is actually a pretty good deal.

I am having a hard time getting approved for a conventional loan
though (wanted to do a 5-1 ARM which FHA does not offer - they
also do not have 80-10-10 so you have to pay a PMI). If anyone
has >$100,000 in student loans in deferment - and got qualified
for a conventional 5-1 ARM - how did you do it?

Thanks.

gjp25....looking to buy. the whole mortgage thing is what is driving me crazy. Have a guy (who i know) offering 1.95% (rate can go up to 5.3%...still not bad), low monthly payments (can go up 7%/year...the payments, not the rate), lot higher closing costs...but he said once i agree to a payment on the house, i can offer them (i.e, 5000 more) and they can pay the closing cost. so instead of paying 5000 up front, i pay it over the course of the loan (all contingent upon the seller agreeing to do it, of course) man, that's why i didn't go into business. I'm still calling around....it's kind of getting old already. i will email you what i decide and let you know on the rates, etc. you do the same. later.