Resident Mortgage Loans

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.

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.

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]suzanne.e.savod@bankofamerica.com[/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.

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!

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.

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.

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.

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.

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!

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.

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

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.

Does anyone have experience working with physicianloans.com? Want to know if they're a legit organization or not. Appreciate any kind of feedback.

Physician Loan had just as limited availability as Bank of America for me.

Has anyone finalized anything with Mike Smela yet? I got my pre-approval letter through him today, and now we are already up to 6.25 on a 5 year ARM. I cant believe that this rate has gone up a full point in the last month. Crazy.

i know i said this before, but given the way rates are now, i think it is even more important to do interest only loans.

living in nyc, my ENTIRE salary goes to paying our mortgage and monthly maintenance fees, and we live off my wifes paycheck. for us, the difference between interest only and a regular ARM was a few hundred more a month.
and on our salaries, a few hundred more in our pockets a month is a lot.

as always consult your mom, dad, uncle or whoever you trust about money because of the risks involved (ie you are not building equity).

I'm just not sure about I/O loans. In SoCal the market is so out of control that I'm not sure it will sustain itself for another 5 years. If the bottom drops out again (like it did 10 or 15 years ago), I could end up owing more money than I started with after 5 years. Also, I can rent a much nicer place and pay at least $1000/month less in rent (after mortgage + property tax + homeowners assoc fees- a condo is all I could afford in SoCal), which would be extra money in my pocket. I figure over 5 years, thats about $60 K that I would be "saving" in the bank by paying rent. So if the value of the condo doesn't go up by at least $50 K or so, it wasn't really worth it, even if you include a tax deduction. Plus the only place I could afford to buy would be a longer drive, older, dumpier, and need work done. Then when stuff breaks, I have to pay to fix it- which is tough when you have no savings. On the other hand, I can easily afford a really nice apartment close to where I'll be working. It's looking more and more like I'll be renting for another 5 years. Dammit.

I have had a hard time trying to decide on whether to go with BoA or Mike Smela and the physicianlender group. I'm fortunate enough to be in a state where BoA is offered (NH)...but BoA has some stricter debt/income ratio restrictions and so I will not be able to get as much $$ with them as with Mike Smela. I feel maybe a little more secure with BoA just b/c its a big name...but I'm sure theres no reason to worry about dealing with Mike and his team. It seems that the I/O loan with Mike might be the best option for me b/c it frees me up to be approved for more $$ with a lower monthly mortgate payment. Also, my wife will be eventually getting a job once we move to NH (but cant use that in calculating income currently b/c she doesnt have the job yet) and we can use that extra money to put towards the principal every month. So...youre right in saying that you dont gain equity with the I/O loan UNLESS youre disciplined enough (and financially able) to put additonal money towards your principal whenever you have it. You may not gain as much equity in the end b/c there may be months when you cant afford to do that...but it certainly seems to provide you more freedom to do what you want with youre excess cash. If you have a month where an unexpected expense comes up then you can put that $$ towards that..but if you just have that money sitting around you can put it towards your principal and gain equity. Mike has told me that about 200$ per month usually goes towards the principal with the full loans...which will give you about 12000 in equity over 5 yrs. If you can afford it theres no reason why you couldnt gain this same eqity or more (if youre rolling in $$) over 5 yrs with an I/O loan. Anyways, those are just my thoughts. Id love to get any advice or feedback or correction if need be from those of you out there who know much more about this process than me...b/c I'm new to it all and am learning as I go.

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W

I am trying to find out if Mike will do the same as Bank of America is right now. Some people on SDN have posted that BOA is waiving the 1% origination fee in exchange for a point paid to decrease the Interest rate. So paying 1 point takes Mikes current 6.25% 5yr ARM rate to 5.75. Thats about $90/month on a 200k loan. That is significant. Another guy at Suntrust said that they do this as well, as it is just semantics. As it stands, you would have to pay the 1% orig fee with mike, plus 1% to pay down the point.

I am having the same thoughts at docuw. I originally thought Smela was the way to go, but then decided to get pre-approved w/ BOA as well. Plan is to go w/ whoever has the best total package on the day we are ready to lock on a rate.

As someone above mentioned, the interest rate is going up briskly and BOA lets you lock on a rate 60 days b/f closing and Smela only lets you go out 30 days so if the rate seems to stay uptrending, that is another strike against Smela.

One tie breaker is that there is a BOA office in the hospital where I will be working and I will be doing by banking through them.

(DocByGrace, we are classmates. I am the one who is damn-near Canadian.)

When I talked with Smela I asked about the 1% origination fee, and you do indeed need to pay it, but he told me the money is actually put toward your escrow. If anyone is still considering working with him, I would probably verify this information, but if it goes toward escrow, it's not a total loss.