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Like traditional mortgages, the process of obtaining a Physician Mortgage can seem overwhelming (but it doesn’t have to be!). Gather your financial documents (income and debts), obtain your FICO credit score, and meet with a lender specializing in physician mortgages. A general overview of your financial situation should allow a lender to give you an idea of the amount of money (and home price) you can reasonably afford.
Get to shopping! Once you have found the right home, you can make an offer based on your pre-qualification budget. Then the official application process begins. The lender will provide you with a loan estimate, disclosing clearly the amount borrowed and estimating costs like taxes and insurance specific to the property and location you have chosen. Once you decide to move forward with this estimate, more detailed financial documents are collected to begin underwriting.
The house will be appraised, and any repairs indicated.Once the underwriter provides the final disclosure, the buyer has all of the necessary information about the purchase of the property and terms of the loan. You will have an opportunity to review this information prior to closing (when you take possession of the house!).
In total, the process can take between 45 and 120 days. This gives you time to pack and prepare for moving into your new house!
Proof of income (all sources)
Employment Contract (for Residents)
Property Information (if you have found a home)
K-1s, P&L & Balance Sheet (if self-employed)
Not all lenders specialize in physician mortgages. Because this is a specialized niche in which lenders need to have experience, don’t settle for one that does not. Check out our list of lenders who specialize in these types of mortgage; this is not a conventional loan and requires a firm understanding of the process. Knowledgeable lenders will help you with the pre-approval process, ask relevant questions about your medical practice, and offer competitive rates and loan terms. Don’t be afraid to shop around, but there is such a thing as analysis paralysis. Stick to no more than 4 potential lenders; any more than this can be overwhelming. The right lender will guide you through the extensive mortgage application process, understanding the unique conditions involved in a physician mortgage.
- Pay close attention to your credit report. With identity theft occurring at increasing rates, it is good practice to monitor your credit score regularly.
- Don’t borrow money. When you are preparing to purchase a home, it is not a good time to buy a new car or take on any other mid- or long-term debts.
- Create a budget of your monthly expenses, including your student loans. Although student loans aren’t included in your debt-to-income ratio, they need to be included in your monthly budget (and take away from the money you have to pay for a mortgage!)
- Jumping in too soon. Purchasing a home is a major life decision and should not be taken lightly. Part of home ownership is the commitment to the life you have built in the community, the neighborhood, and the property you now own. Think long and hard about the time and hard work you will invest in the home before you sign for that mortgage.
As you graduate from medical school and/or are currently in your residency, you may wonder if now is the right time to buy a home. Student loans, the possibility of a long-distance move and the uncertainty of entering the workforce may have you fearful of the commitment of borrowing a large sum of money for a home. However, there are multiple advantages to purchasing a home, as long as you plan on remaining in the area for at least 5 years. Other advantages are:
Payments build equity
May be tax deductible
You can make changes to the property
Lower debt-to-income ratio (student loans not included)
Rents continue to rise; mortgage payment locked in (depending on loan type)
A conventional mortgage has a host of requirements, from minimum credit scores to down payment requirements. Physician and dentist mortgages take the high income and low-risk nature of medical professionals and offer an attractive product, helping new doctors and dentists get into a home despite their student loans and minimal credit history.
Just like choosing to attend medical or dental school required in-depth consideration, purchasing a home–perhaps one of the biggest debts you will ever hold, outside of medical school loans–should require a lot of consideration on your part. Some of the biggest questions to ask yourself are:
How long do I plan to live in the area?
Do I want to be tied to one location and the house payment?
Am I prepared to make improvements to a property
Do I need the amenities which often come with apartment living?
Am I looking to open or invest in a practice in the near future?
Do I have enough life insurance to protect my investment?