Should I take advantage of a physician mortgage?
July 17, 2012 7:33 AM
NYC real estate filter - the wife and I are looking to buy a 2BR condo in Manhattan...
We've been looking at places that are selling for 1-1.2 million. Have saved about $60k so far for a down payment, but for various reasons it will take 8-12 months before we can afford "the rest" needed just for a 10% down payment and various fees and closing costs.
We're don't *need* to move in a hurry from the small walkup apartment we currently rent, but it would be nice to move, and insurance rates are low, and searching for a place will be easier for us, schedule-wise, over the summer and early fall.
Since I'm a physician a few years out of residency, should I take advantage of "physician loans" that let you skip the mortgage insurance and let you put less (0-5%) down? The institutions that are offering this are either organizations I've never heard of or places I'm reluctant to partner with (like Bank of America).
We've been looking at places that are selling for 1-1.2 million. Have saved about $60k so far for a down payment, but for various reasons it will take 8-12 months before we can afford "the rest" needed just for a 10% down payment and various fees and closing costs.
We're don't *need* to move in a hurry from the small walkup apartment we currently rent, but it would be nice to move, and insurance rates are low, and searching for a place will be easier for us, schedule-wise, over the summer and early fall.
Since I'm a physician a few years out of residency, should I take advantage of "physician loans" that let you skip the mortgage insurance and let you put less (0-5%) down? The institutions that are offering this are either organizations I've never heard of or places I'm reluctant to partner with (like Bank of America).
Work with anyone you want on a "Physician Loan" your mortgage will be sold as soon as the ink dries on your contract anyway.
You may as well start with BofA, if they offer the loan, at least you've heard of them.
I originated my mortgage paperwork with Virgin Finance and they sold my mortgage to Bank of America. It's galling but there's nothing you can do about it.
posted by Ruthless Bunny at 8:18 AM on July 17, 2012
You may as well start with BofA, if they offer the loan, at least you've heard of them.
I originated my mortgage paperwork with Virgin Finance and they sold my mortgage to Bank of America. It's galling but there's nothing you can do about it.
posted by Ruthless Bunny at 8:18 AM on July 17, 2012
or places I'm reluctant to partner with (like Bank of America).
First of all, be very clear: you are not partnering with the bank, and the bank is not your friend. They pretty much all suck. But the thing is, you can't actually avoid the suckage by avoiding BOA, Citi or Wells Fargo because at any time, your mortgage can (and very likely will) be sold by them or to them. In other words, you have absolutely no control over who you are going to spend the next 30 years dealing with, and it blows.
You need to consider the bank you go to as nothing more than the originator - the party with whom you lock a rate. That's it. Get the best rate you can from whoever is offering on the terms that work for your repayment needs.
posted by DarlingBri at 9:21 AM on July 17, 2012
First of all, be very clear: you are not partnering with the bank, and the bank is not your friend. They pretty much all suck. But the thing is, you can't actually avoid the suckage by avoiding BOA, Citi or Wells Fargo because at any time, your mortgage can (and very likely will) be sold by them or to them. In other words, you have absolutely no control over who you are going to spend the next 30 years dealing with, and it blows.
You need to consider the bank you go to as nothing more than the originator - the party with whom you lock a rate. That's it. Get the best rate you can from whoever is offering on the terms that work for your repayment needs.
posted by DarlingBri at 9:21 AM on July 17, 2012
Have you considered credit unions? Some have a policy of not selling their loans. There might be some super-cool credit union for doctors out there that could fit your needs. After 5 seconds of googling, the NIH has a physician's credit union, but they don't offer mortgages in NY. It doesn't have to be a doctor credit union either - you might be eligible for Navy Federal Credit Union if you or a member of your family was in the military, there might be a local, smaller credit union that you could work with, or a local ban that you trust who has a policy of not re-selling their loans.
The willingness of a bank to loan to someone that puts less money down, while waiving the mortgage insurance requirement doesn't necessarily have to come from a 'more risk, so there must be a greater payoff' vector - it could be that doctors are just way less risky to lend to in the first place.
posted by amcm at 12:58 PM on July 17, 2012
The willingness of a bank to loan to someone that puts less money down, while waiving the mortgage insurance requirement doesn't necessarily have to come from a 'more risk, so there must be a greater payoff' vector - it could be that doctors are just way less risky to lend to in the first place.
posted by amcm at 12:58 PM on July 17, 2012
The Physician Loan programs I am aware of (not too many left anymore) -- are all covered by private venture firms (which is why you haven't heard of them). They don't sell you loan and they manage the entire life of the loan. Also, they don't have a pre-payment penalty *and* the rates are nearly identical to a traditional loan with 20% down. They ignore your outstanding medical school loans and only factor in the other debts. All in all, it is a very good deal. I assume they want to get all your loan business through the years - cars, children private school loans, investment property and this is their way of luring you in.
In the end my wife and I went the tradition loan route because she took 6 months off to study for the boards and they had a rule about closing on the property within 12 weeks of the start date.
posted by LeanGreen at 1:04 PM on July 17, 2012
In the end my wife and I went the tradition loan route because she took 6 months off to study for the boards and they had a rule about closing on the property within 12 weeks of the start date.
posted by LeanGreen at 1:04 PM on July 17, 2012
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posted by Yellow at 7:39 AM on July 17, 2012