Josh Mettle
[Editor's Note: Tthis week we're going to focus on home buying and mortgages, especially physician mortgages. On Monday, I surveyed the physician mortgage landscape. Today and tomorrow feature a two-part guest post by Josh Mettle. Friday will be a Q&A post about some difficulties an intern experienced trying to get a physician loan. You should be aware that Josh and I have a serious financial conflict of interest. Not only did he give me a great deal on my current mortgage, but his company has also purchased the most prominent ad on this site, the one just above this paragraph if you're reading the web version of this article.
Josh is a fourth generation real estate investor and owns rental homes, apartments, and mortgages. He specializes in mortgage lending to physicians and similar professionals in eleven states. He is in the finishing stages of a book entitled: Why Physician Home Loans Fail: How to Avoid the Land Mines for a Flawless Home Purchase for which I wrote the foreword. If you like what you're reading here, you may want to get the book. Additional information on purchasing a home, relocating, and getting a mortgage can be found on his website.]
In the post mortgage meltdown world of mortgage lending, physicians face more challenges and have a higher rate of underwriter decline than any other professional client we advise. It’s shocking but true. Spend a few minutes in physician chat rooms where the topic is mortgage and you will read nightmare after nightmare horror story. It’s truly scary what a botched home loan and closing can do to a family.
With Match Day coming up on March 21 and in preparation for all the physicians who will be relocating for their residency programs, fellowships and new attending positions, I’d like to share this helpful insider information from my upcoming book “Why Physician Home Loans Fail — How to Avoid the Land Mines for a Flawless Home Purchase” being released March 2014. This article is aimed at physicians who are considering buying a home and are looking to get a doctor mortgage to help fulfill that dream of home ownership. Follow these 6 insider steps to avoid time-consuming and embarrassing mistakes and ensure a flawless home purchase.
1. Choose a Mortgage Professional Who Can Educate and Truly Guide You
If you just do one thing right, find a professional experienced with doctors and dentists. You’ve got to do your due diligence by researching and interviewing the professional. Make sure the mortgage professional has experience with physicians and has done a good job with physician clients in the past.
If you spend extra time and energy to find the right person and then allow that professional to guide you through the process, you’re much more likely to get to closing without a hitch. Physicians often run into trouble when they think that there is no reason that they shouldn’t get financing. For instance, the resident who was easily able to get a home loan back in 2006, before the mortgage meltdown, who is now making significantly more money, may think that getting a home loan today should be easy and any bank would finance them. However, the physician may not be taking into consideration all of the factors, like his new position being a 1099 independent contractor or wanting to close on the new home prior to starting the new position. Both of which would throw a huge wrench in things for a conventional mortgage lender.
The reality is that a lot has changed and under the lens of the post mortgage meltdown underwriting guidelines, getting a loan is not as easy as it used to be. If there’s a deficiency or complication with your situation, you need an expert to guide you through the loan process and all possible solutions. Nobody is better able to do this than someone who specializes in physician home loans; they’ve seen all the same challenges before and have an arsenal of outside of the box solutions.
2. Verify Your Lender’s Reputation
Once you think you’ve identified a good loan officer, verify his or her reputation. Look for past client testimonials and don’t be afraid to ask how many doctors they have worked with in the past few months and how many they are working with currently. If you don’t get a good vibe or you’re not sure, I’d advise you to keep looking or even ask to speak with past physician clients.
Once you’ve identified several loan officers in your area who appear to be experts, who have testimonials and who look like they serve physicians on a regular basis, it’s really important to have a good phone conversation with them. Take a few minutes to cut out all distractions, don’t call from the freeway or emergency room (I’ve literally had a call from an anesthesiologist in the middle of a procedure). Find a place and time you can be focused on the mortgage professional you are interviewing, let them know any challenges that you can see, such as student loans, relocation to a new state and or job, source of down payment and ask them a couple of intelligent questions. You will know in your gut whether the mortgage professional is the real deal.
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. [Editor's Note: Remember that “pre-approval” is a more comprehensive process than “pre-qualifification.” Josh is recommending here that you make sure your potential lender has all your income documents (like contract) and credit documents (like student loan amounts and payments.)] 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.
The thing to keep in mind is that the underwriter is the one who has the final say. Finding a seasoned loan officer who is experienced with doctors is a great first step, but at the end of the day, it doesn’t matter how good your loan officer thinks your file is because he or she is not the final decision maker. It’s not like a mom and dad situation where the underwriter and loan officer meet in the middle. It’s like a kid and parent situation and the parent in this situation is the underwriter. That’s where the buck stops. Get all of your income, new employment contract, student loan changes and down payment documents all the way to the underwriter and insist on a full Credit and Income Approval. Once you have that, you’re ready to rock.
If you follow these first three of six steps to a flawless home purchase, you will be off to a great start. But there are a few more things you can do to ensure the rest of your transaction is flawless. Be sure and read the next installment for the last 3 steps of Flawless Home Purchase.
Had a physician mortgage horror story? Let's hear it. Comment below!
When I was shopping for a physician loan in 2012 halfway through my residency, I learned none of them could be used for condos. I ended up getting approval from a local credit union which didn’t have a specific doctor loan program. If that had not worked, I would have had to continue renting or buy a home out in the suburbs which I wasn’t willing to do.
I had no problem being a 1099 contractor for my physician jumbo loan with suntrust.
I am in search for one now but too bad that they dont serve in NV.
RJ, we actually do serve Nevada. Feel free to contact me with any questions you have.
I had a physician loan at the start of residency and everything was smooth and easy. It was when we went to buy a home after residency that we had a problem. We did not use a physician loan, but we were approved by the mortgage company based on signed contracts for both my new job and my wife’s as a professor at an area college. We were putting 10% down and the value of the loan was actually less than one year of income in our contracts. However, two days before closing we were turned down because the company considered us both “unemployed” because our previous jobs ended on June 30 and we weren’t scheduled to start work until mid July. Fortunately our realtor was able to come up with a new lender and everything went through on time. This was in 2010 and I don’t think physician loans were as common then due to the issues in the mortgage market back then.
Decent article but really I question how much the lender or the lending officer truly matters. The VAST majority of all small players in the market are going to turn around and sell their loans to bigger companies anyways. At least the honest ones will tell you. USAA hangs on to theirs which is nice. My was sold immediately to Wells Fargo.
I have to disagree with you there. Most “Doctor Loans” are non-conforming, thus they can’t be packaged/securitized and companies tend to keep them on their books. I know Regions still owns the doctor loan I got.
Agree. Ours was immediately sold to Chase who had been super eady to deal with.
Having closed over 200 conforming loans, I know that the “Doctor” loan program offered by a couple of the banks are legitimate. No money down, no PMI, student loans in deferment don’t count and the rate is competitive all else considered. You can’t really work with a broker though, the banks are holding these loans for themselves. There are only a couple of exceptions, I wish I could orginate them but I refuse to work for those institutions.
Hasn’t WCI advised against going to people who say they specialize in doctors in previous articles because they will take advantage of you? This article seems to be completely contradictory to that earlier advice.
Also, shouldn’t you live in an area before buying a house so you know about the neighborhoods and how traffic will effect you in your normal life? If you wait you also wouldn’t run into the problem about not having an income history. An article on how IBR effects the mortgage process I think would be more pertinent then the these two articles that could be summarized as “go to someone experienced” and “people you know trust them”.
I have no problem with using a financial professional who specializes in physicians. It cannot hurt you to have someone who actually understands the handful of unique financial challenges that doctors face. I recommend, however, that you avoid a financial professional who “specializes” in (marketing to) physicians. Sometimes it is a fine line, but you’ve got to learn how to tell the difference.
Paragraph 3 under question 1 “the reality..” The ad is messed up on the mobile website causing 1-2 words per line.
Thank you. I’m still trying to iron out the bugs with the mobile version. Please be patient but do keep me updated when the ads or other pictures are messing stuff up.
Edit: I took a look at this post on my iPhone 5S and it looks fine. Was it another post that looked bad? What kind of mobile device are you on if it still looks bad to you?