You’ve worked hard, usually on little sleep, and now you’ve received your first employment offer outside of training. CONGRATULATIONS!! Now what?
As a Physician, you’ve spent the majority of your life training. Chances are you have at least $200k in student loan debt and very little money saved. Your future earning potential is great and leveraging the opportunities available to those in your profession is important.
Often, one of the first tasks on a Physician’s “to-do” list is purchasing a home. Financing that new home is where a Physician Loan comes in handy. These loans are designed specifically to meet the unique needs of Residents, Fellows, and Attending Physicians. The Physician Loan was designed to help you save money and streamline the process of making a home purchase. Below, we have outlined a few of the key benefits.
Since saving money is tough in training, mortgage loans available with little to no down payment. Most of these loans will have the best terms with a 5% down payment, but there are options with less available.
This insurance premium is waived for Physicians. If you are not putting 20% down, lenders will typically require the payment of mortgage insurance. This insurance premium will typically add about .375% to .75% to your annual mortgage payment. This is a big savings that most others won’t have access to.
Your student loan debts can be a sticking point for any lender that doesn’t specifically offer a Physician Loan. Most lenders will count 1% of your current loan balance as a monthly payment, making the home you desire unreachable. A true Physician Loan will look at your student debt much differently, using income-based payments or in some cases excluding them entirely from the picture.
You can purchase a home up to 60 days before you start your new position. Traditionally, lenders will want a pay stub before letting you settle on a new home. This is tricky when you’re starting a new job in a new city. A Physician Loan will let you move in and get acclimated to the area up to two months in advance.
Real Estate Agents
There actually are real estate agents that focus on the needs of Physicians. These agents not only understand the home buying or selling process, but also know how to structure your offer to be competitive in the negotiation process and to facilitate the physician loan. These agents will also guide you through customary inspections which could include a general home, pest, radon and/or lead paint inspection. Lastly, these specialized agents understand your needs as a Physician and are flexible with their time and availability throughout the entire process.
Every Physician’s situation is different and it’s important to know what’s available and what financing strategy works best for you. There are variables to consider, like length of time you will stay in the home, projected time you’ll remain at your employer, and current rates on other debts you have. At the end of the day these decisions may be not be easy and you should seek professional advice to determine what works best for you, your family, and your financial future.