Congrats! You have matched and the adventure of residency awaits you. Now you need to figure out where you are going to live and fast! Here’s what you need to know to successfully navigate the landmines and have a flawless home purchase in 2017.
Your primary challenge is going to be finding a home. As I write this post there is only 3.6 months supply of homes on the market nationally. That means the pace of monthly sales would completely eliminate the supply of listed homes for sale in less than 4 months (if no new homes were listed for sale). Anything less than 6 months supply is considered a sellers market. Many areas of the country are in an extreme sellers market, which means sellers dictate the terms of the deal and the speed they want the transaction to close. You either have to agree to those terms or they pass you up and find another buyer, often a cash buyer, who can meet their terms. This can be a monumental challenge for many doctor mortgage lenders and you, their perspective client. It is imperative you find a lender than can move fast and close in less than 30 days.
There are a couple reasons why doctor mortgage loans tend to move slower than conventional mortgages. First, most physician and doctor mortgage loan companies are large national (think too big to fail) banks and they are layered with bureaucracy, government regulations, antiquated IT systems, and status quo (good is good enough). This is similar to the level of care you might expect to get at the largest hospital systems in New York or Los Angeles on a busy Saturday. They mean well, but they can only do what they can do with the resources they have. Nimbleness and speed to respond might not be how you would describe them.
The fact is, many of the larger banks that are the purveyors of doctor mortgage loans simply cannot keep up with the fast paced real estate market. Check out this list of the top ten hated companies in the U.S.. Not one, but two of the biggest banks in the country make that list. I can tell you we receive an unfortunate amount of business from physicians that are declined the week of, or worse, sometimes several weeks after their settlement deadline. It’s sad but true.
What can you do to protect yourself?
1. Choose a Mortgage Professional Who Can Educate and Truly Guide You
If you were to follow just one of these steps, the most important is to find a professional loan officer experienced and proven to work with doctors. The ideal loan officer should have unique physician home loan programs, which have more liberal underwriting guidelines making it easier for you to qualify and ideally provide you with a better experience.
2. Verify Your Lender’s Reputation
You can protect yourself from this by carefully reviewing the client experiences of your fellow doctors. Do some Googling about client experiences, ask for references, and request your lender put in writing how long it takes on average to close their physician home loan clients. This is rarely thought through in detail but can make all the difference between you getting a home and the home getting away from you.
3. Obtain a Credit and Income Approval
A Pre-Approval is simply not enough for you to gamble your family’s new home on. You must get a full Credit and Income Approval if you want to be certain you won’t be surprised the week of closing. The importance of getting all credit and income documents into the hands of an underwriter as early in the process as possible cannot be overstated and is frequently missed.
The thing to keep in mind is that loan officers are paid to say YES, while underwriters are paid to say NO. They are the gatekeeper and the person who will give the final authority for your loan to close. So ask yourself, do I want to meet that gatekeeper while I’m house hunting or do I want to meet that gatekeeper when my home is boxed up and the Penske is on the way?
4. Carefully Select Your Realtor
Steer clear of real estate search websites as a means to locate your next Realtor. Keep in mind those Realtors pay for the opportunity to market to you, which in many cases is indicative of Realtors who don’t have a lot of experience and don’t have a lot of referrals coming from past clients.
If you are relocating, you are looking for someone with relocation, ideally physician relocation experience. You should be able to find such realtors through an online search, via referral from the medical department or practice you are joining, a colleague who has recently relocated to the area or through a referral from a loan officer specializing in physician loans.
5. Be Proactive and Stay in Communication
Take responsibility for the deadlines you sign on your purchase agreement and ensure you don’t lose your earnest money. This is truly your responsibility and all you have to do is to be aware of your inspection, appraisal, financing and settlement deadlines. I find most home buyers rarely even know the deadlines in a purchase agreement even exist.
A physician home loan or doctor mortgage loan can be a powerful tool to help you into a home with the least amount of cash possible, sooner than most conventional loans; in many cases with less overall expense as you will likely avoid mortgage insurance. This does not mean they are the right prescription for everyone. Finding a trusted mortgage advisor that can help you navigate the mortgage and real estate process is ultimately going to offer you the highest probability of successfully closing on your new home. Good luck!
If you would like more information about physician home loans, you can download our free eBook and request a client consultation here: http://physicianmtg.com/
Josh Mettle is an industry leading author and mortgage lender, specializing in financing physicians, dentists, CRNA, and physician assistants. You can enjoy great physician real estate and mortgage advice here or by visiting his book site. Josh is also a fourth generation real estate investor, and owns a number of rental homes, apartment units and mortgages. Josh is dedicated to helping physicians become more financially aware and able; listen to “Physician Financial Success” podcast episodes or download Josh’s latest tips and advice here. Copyright© 2017 eJLM LTD. All Rights Reserved