Resident Mortgage Loans

physician lender () has some pretty sweet programs just for residents.

thanks noskis..........i'll look into it.....also found out washington mutual has some sort of mortgage plan specifically for residents......

bank of america too, so i hear

I have researched this to the hilt, talked to mortgage brokers from Wells Fargo, Washington Mutual, Physician Lender.com.... All of em. What I have heard from every lender was the same: If you are eligible for the Bank of American "M.D. Loan" take it, there is nothing better for people like us: cash poor, high loans hanging over our heads, but usually good credit rating and earning potential. Unfortunately, it is offered only in 22 states. Look into it. I couldn't do it in Pennsylvania, so I took the Physician Lender.com loan. Owner is a guy by the name of Mike Smela. He's awesome.
Hope this helps.

thanks......i will be doing my residency in pennsylvania so looks like that is out.....i'll look into physician lender......thanks again

Try Countrywide Home Loans. I took out a fairly good size loan to buy a place in Chicago. The option I have is interest only payments, 5 year ARM. Good deal if you want to own and still a great investment potential as long as the place appreciates.

Although, I didn't do a interest only loan, the bank was more than happy to do a five year balloon with a competitive interest rate. The house also appreciated over the five years a well. So it helped in the end to have a little money to put down on another house. If you do an interest only loan, you will not gain much equity in your home, so avoid it if possible. You may lose money in the end if it doesn't appreciate enough when you consider taxes, maintenance, realtor fees, and interest paid. I think this is easier if you have a spouse that is working as well.

I'm in the process of getting a loan right now - not the easiest thing to do..

It was explained to me that very recently, policy has changed and student loans, even if in deferment are included in calculation..

I got approved for a FHA loan - very easy to do - but you cannot do a 5-1 ARM; only 30 year fixed - nor can you use a FHA loan to buy a townhouse/condo - so I am looking elsewhere.

The best thing I have found is to get a 5-1 ARM for around 4.1% interest rate, 0 points. If you are going to do 20% down - than you are all set. If you are going to do less think about doing a 80-10-10. Meaning 80% of the price of the home is the "main"/first mortgage; 10% is on a second mortgage and 10% down. Some people even do 80-15-5. This lets you avoid mortgage insurance. Why is this important? Becuase its around $50-75 a month and NOT tax deductible. While your interest on a 80-10-10 is.

Also, for those of you who haven't heard of a checking account - now maybe time to open one...if someone is going to help out with the downpayment - have them deposit at least 50% of the down payment in YOUR account. Most banks want to see that at least half of the down payment comes from the buyer themself. If they ask you how you all of a sudden have this account...say that you earned money in college and med school in odd jobs - your parents were holding onto your savings and you thought it was about time to open an account since you will finally be getting regular pay checks. Bottom line - pamper your overall balance
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If you are in a six year program think about a 7-1 ARM. Rates being so low right now - its good to get it fixed for the duration you will 'own' the house. If you plan on settleing in the area and keeping your home you are buying for sure - than definately lock in a low rate (30 year fixed).

Also, buying a house is not the best thing for everyone. A important thing to remember in this market - your bottom line - monthly mortgage payment may seem resonable (around $1000-1300/month);
however, this is mostly due to lower interest rates...most people selling homes know rates are low and you are willing to pay MORE for a house. So they price a $150,000 townhouse from 2 years ago at $195,000! Becuase montly payments with a 7.2% interest rate vs. a 4.1% will come out around the same. (using rough numbers). So be careful of price inflations due to current rates. If in five years rates climb - which they will - potential apperciation values ofthe home may drop - and now you may end up selling your house for lower than you had inticipated - not good news. Where is that equity everyone keeps talking about?

The best thing to do is whatever area you are buying in - get a buyers agent. As far as a buyer goes - this is a free person to help find a new home - and knows the area etc. They can show you any house - listed by any agency - and they split the commission most off 50/50 with the seller agent.

Lastly from my limited experience I have noted one other avenue is worthwhile to look at - new developments. Being who we are - we have little time for home maintence. So this is ideal. I was shocked to know that new homes being built right now very close to other older houses (30-40 years old) were priced almost the same! AND most very big builders for new developments offer AWESOME low interest rates like 2-3% to draw in buyers!! This is what I am looking into now - and ready to put in an offer any day now.

Everyone should pick a bank and use there website for mortgage calculators. Turst only your own math. Don't be fooled by mortgage brokers - they want you to get the loan from them - they just don't want you to know that. For people in very expensive places - it may be worth renting - do the math and figure it out. Most people think they buying is definately the way to go becuase they are building personal asset - however, first five years of most loans you are paying mostly interest! Paying off very little of the principal. So what is the difference in paying interest and paying rent?! Not much...so buying is not for everyone.

Take care everyone and good luck!

Peace.

I think that the restrictions you mentioned on the FHA loan may differ between states. My wife and I are both students and are in the process of buying a townhouse with an FHA loan. We had the option of a 30-year fixed at 5.5%, or a 1-1 ARM at 3.5. We chose the ARM because even if interest rates raise the max each year, we will just be at 5.5% during my fourth year when we will (hopefully) be moving to whatever program was nice enough to take me. I agree with everything else you mentioned. Our townhouse is one of 8 remaining in a brand new development, so the builders took $12,000 off of the price to move the last units. We used part of that discount to cover all closing costs and the rest to lower the cost of the house. The best part of the FHA is that you only need 3% down, but you will still be paying the PMI. I'm not sure if you can do an 80-10-10 with an FHA.

FHA??? not sure what this is?
also, if you are disciplined to pay on the prinicpal with an interest only loan, it seems to me a good way to go. this is all new to me, but like what was said above....don't forget about the taxes, etc. that you are paying. So at the end, if all you pay on is the interest, then you lost all that money to taxes, etc. and still haven't paid anything on the principal. I have found with interest only loans, the monthly payments are pretty good, so throwing some more money in per month to go against the principal is probably a good idea.

chee68....are you looking to rent or buy when we get out there......i am doing my homework now.......any leads on mortgage programs.....and FHA is federal housing authority......

keep in mind that interest paid on a mortgage is TAX DEDUCTIBLE (taxes are the things that the government charges you when you have a job, a concept foriegn to many career students like ourselves), so the financial implications of home ownership are not always immediately apparent.

a word about new homes - i have just sold the house we bought brand new before med school, and am moving to a 24 year old house for residency, and couldn't be more stoked. remember that the vast majority of new homes come with little or minimal landscaping, which is way more expensive than you probably think. and even if landscaping is included, think charlie brown's christmas tree. i am leaving scorched earth behind and moving into large mature trees and shrubs with actual roots. personal prefernce of course, but keep it in mind.

also, new houses invariably have problems of their own because they settle. wood dries and twists, foundations sink into the freshly graded earth, etc. also, tract homes (assuming that we are not talking about fat custom homes just yet) cut every possible corner behind the drywall. it's the american way, and we all know it. of course the appliances, wiring, water heater, AC, etc are new and not likely to give you problems like in an older house. just know that there are just another set of problems to consider. 3 doors in the house we just sold have not shut for 2 years, plaster cracks, cheap vent fans, to name a few.

lastly, the deferment rules only apply if you are going fha, which is not necessarily everyone. otherwise, if you are in deferment or eligible for forbearance for 12 months from loan application date, they do not have to count it into your debt to income ratio. and a word of caution about deceiving mortgage brokers about where the down payment came from - mine wanted a paper trail. they often don't mind gifts, but tell them up front if that's the way you are going. remember that you have an MD and a job now - get out of the unemployed student mentality that is trying to pull off a fraud to get you the financing you want.

cheers

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.

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.

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.

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]michele.ebert@sbcglobal.net[/url]

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.......

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.

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%.

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.