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Experiences with refi of big doctor loan??

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  • Experiences with refi of big doctor loan??

    My wife and I bought our “big doctor house” with a 0% down physician mortgage about 1 year ago. Not ideal, but I had just super funded my kids’ 529’s and didn’t have the down payment handy when the “dream house” popped up in our target area with very low inventory.

    We both have big/stable incomes and would now like to refinance to more favorable terms.

    We’ve paid down about 10% of the principal in the first year, and have the cash to put another 10% into it over the next few months.

    current mortgage: 15/1 arm (30 year total) at 3.625%, 1.4M at origination, currently 1.26 remaining

    We would like to refinance to a 15-20 year fixed at a lower rate.

    Does anyone have experience refinancing a physician loan of this size? Would we have to get to 20% equity before a refi would be possible? What kind of jumbo rates are people getting on refi?

    Thanks in advance.

  • #2
    I got 2.5% on $515k for 15yr last month


    • #3
      The unknown will be the assessed home value based on your loan appraisal. You have paid down the home debt by 10%, presumably put down 0% initially of the appraised home value. If you apply for a refi, if the appraisal comes in the same you have 10% equity and another 10% will get you to 20% down. If the appraised value is higher, you have more than 10% equity and should be fine. However, if the home appraises for less even though you paid down 10% of the loan you actually have less than 10% equity, so if it appraises for 10% less then the bank will see it as you have no equity. If it appraises lower you could be seen as upside down on the home, in which case your odds of successful refi is quite low. That's the danger in having low equity, the lender doesn't see you as having enough skin in the game. It's okay if you don't get to refi now it's not like 3.625 is bad, and you can always try again later when you have even more equity in and/or the home value rises allowing for a more favorable appraisal.

      Generally 7 figure home loans (I took one out myself) tend to require a bigger down payment, I've seen up to 30%. So just in case it doesn't appraise as well as you want it to, going back to a lender offering favorable physician loan terms will likely give you the biggest chance of refi success without needing a large down payment infusion. A working relationship with your banking institution doesn't hurt either, but a large institution becomes bureaucratic regardless of relationship. I've had more success with smaller lenders for this reason.

      Generally jumbo loans tend to be 1/8 to 1/4 basis points above conforming. You may be quoted close to 3% anyway so not sure the refi savings will be justifiable given the closing costs. Treasury yields have been firming as of late.

      Don't worry about funding the 529's too quickly/aggressively - you may wind up with unspent funds. Due to merit scholarships even to private colleges, looks with my oldest starting university next year I will be paying less out of pocket than I did for their private school pre-college education. While 529 fund returns are tax free, you're losing that break on outsized mortgage interest costs plus property taxes above $10K/year, with $750K deduction limit on home loan mortgage/HELOC interest as well.


      • #4
        Originally posted by HeyAnesthesia View Post
        Does anyone have experience refinancing a physician loan of this size? What kind of jumbo rates are people getting on refi?

        Thanks in advance.
        Bought early 2019, ~2.6MM @ 3.875% (I think? Maybe it was 4%?), refinanced pretty quickly (1 year? to 3.625%).

        Within the past two weeks started working on paperwork for 3.0% on ~2.5MM @ 30 years. Was offered 2.875 @ both 20 and 25 years, but somehow that offer evaporated upon further inquiry.


        • #5

          I shopped around a bit, and I can get 2.75% on a 15 year fixed with only 5% equity (already near 10%) using a “doctor refinance.”

          I can also get 2.625% on a regular refi jumbo 15 year fixed, but it would have PMI until I get to 20% equity.

          I’m leaning toward the 2.75% doctor refi as I wouldn’t have to dip into my emergency fund to get the equity I need.

          Overall I’m very excited I looked in to this. I stand to save a TON on mortgage interest.


          • #6
            Based on the couple replies, turns out my "big doctor loan" isn't too big


            • #7
              No 30 year.....