Was your doctor mortgage declined and you are not sure what to do or where to go?
A few years back I received a call from a young man who was noticeably upset. His breathing, his tone, and his words were scattered and erratic. As he tried to regain his composure he told me he had just received a call from his loan officer who informed him that the underwriter had just declined his doctor mortgage loan. The young man was an incoming resident physician who was literally in the moving truck with his wife and two kids; they had expected to sign closing documents the next day and move into their new home before the weekend.
Sadly, we receive an unfortunate amount of business from clients that are quickly “pre-approved”, who are later declined once the facts of their application reach a mortgage underwriter’s desk. Remember this – mortgage loan officers are paid when loans close, so they become conditioned to saying “yes”. The mortgage underwriter is paid to meticulously review all of the loan documents and ultimately say “no” when anything is outside of guidelines. Truly, the underwriter is the gatekeeper. They are risk control for the bank and they are literally paid to say no if certain risk factors are present. You should know this and I recommend you INSIST an underwriter review your application and employment contract before making an offer on a home.
Having an underwriter see your documents for the first time as the boxes are being loaded into the moving truck is a recipe for disaster. Unfortunately, that is how the majority of doctor mortgage companies do it. It all comes down to cost. It is expensive to pay an underwriter to review applications for people who might never find a home, might decide to rent, might decide to go with another lender, etc. It’s a line item cost most doctor mortgage companies can simply do without, regardless of the cost to the families it impacts.
So what can you do?
- Do your homework and base your decision on more than just a rate quote. Clients tell us they are quoted one rate and then when they find a home the rate changes. This bait and switch tactic happens regularly, so you need to make a decision based on more than a verbal quote.
- Google “INSERT BANK NAME mortgage reviews” and you will find hundreds if not thousands of reviews by actual clients that will tell you what the experience of working with that lender is really like.
- Insist on a full Credit and Income Approval rather than a pre-approval. This approval should be reviewed and approved by an underwriter, not just a loan officer (who is paid to say yes).
- Make sure your lender can move quickly. Today’s real estate market is an intense seller’s market. If you cannot compete on speed to close, your offer will likely not be accepted over the competing offers. If your doctor mortgage is already Credit and Income Approved, it will help you close quicker because the heavy lifting is essentially all out of the way at that point.
What can you do if your doctor mortgage is declined?
The good news is that not all doctor mortgage loan companies have the same underwriting guidelines; in fact they vary quite a bit from company to company. These doctor mortgages and physician home loans, as they are also known as, have different investors who buy them and as such the guidelines have substantial variances. Find a list of doctor mortgage lenders and start making calls.
- Call the new potential lender and be totally upfront about the situation and ask if they have a solution for that issue. Get out all the dirty laundry up-front, tell them everything that could be a problem.
- Ask them to commit to a closing date if you get them your full file today. This is going to be key; you will need to find someone who can move insanely fast if you are going to keep your deal alive.
- Research lender’s reputations and read their online reviews. You do not want to find yourself in the same mess you did before. It’s important this lender has a solid reputation with past physician clients and is experienced with doctor mortgages. Google “INSERT BANK NAME mortgage reviews” and you will find hundreds if not thousands of reviews by actual clients that will tell you what the experience of working with that lender is really like.
- Ask them if you can pay extra for a rush appraisal, which always has to be re-ordered if you switch lenders. Ask them to go with the fastest turn time possible regardless of cost.
- When the lender requests documents or other information, deliver them within hours of their request.
I hope these tips help you avoid the landmines for a flawless home purchase! Contact our doctor mortgage expert Josh Mettle at 385-355-2130 or here. We’d love to hear from you!
Josh Mettle is an industry leading author and mortgage lender, specializing in financing physicians, dentists, CRNAs, 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.
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*A pre-approval does not constitute a full loan approval or a commitment to lend. Full approval is subject to underwriting approval based on program guideline requirements including but not limited to a satisfactory appraisal. Copyright©2017 Fairway Independent Mortgage Corporation. NMLS#2289. 4801 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all dollar amounts. Other restrictions and limitations may apply. Fairway is not affiliated with any government agencies. Fairway is required to disclose the following license information. Alaska Mortgage Lender License No. AK2289; Arizona Mortgage Banker License No. 0904162; CA: Licensed by the Department of Business Oversight under the Consumer Finance Lenders Law; Loans made or arranged pursuant to a California Finance Lenders Law License #262571; Illinois Residential Mortgage Licensee No. MB. 0005475; Kansas Licensed Mortgage Company. KS License #MC.0001375; MA Mortgage Broker and Lender License #MC2289"; Minnesota: MN-MO- MN-MO-20183136. This is not an offer to enter into an agreement. Any such offer may only be made in accordance with the requirements of Minn. Stat. Section 47.206 (3) and (4); Mississippi Licensed Mortgage Company; Licensed by the New Hampshire Banking Department Licensed by the NJ Department of Banking and Insurance; Licensed Mortgage Banker-NYS Department of Financial Services; OH MBA License #2289; Oregon Mortgage Lender License ML-3791; Rhode Island Licensed Broker & Lender; VA: NMLS ID # 2289; Washington Consumer Loan Company License No. CL-2289.