Private Banking for mortgages

[Lovestruck]

Dear all,

I am looking to do a physician loan w/ nothing down (I know interest rates are a bit higher than regular), with either First National or Goldwater Bank; has anyone dealt with either? What am I looking for when finding the right kind of person to deal with. Should they be like a regional manager/vice president of the private banking group? what other qualifications should I look for?

Thank you!

[Zaphod]

Is there a specific reason you are looking for a no down payment mortgage? While I am certainly far off the dogmatic side of paying down all debt, a no down loan puts you at the mercy of the market and can leave you with fewer options than you may otherwise have.

Whats your situation career and financial wise, price of said mortgage to cash flow, etc...?

[Lovestruck]

Between my husband and I we have about 370,000 in student loan debt. I am doing IBR. We do not have 20% unless we borrow from family, which I rather not do if I do not have to. We do not have much cash reserve and understood that it is best to have some left for emergencies. I will be starting my attending job in September, currently finishing fellowship. We are looking at mortgage around 300,000-350,000; my salary will be 180,000 and husband's somewhere in mid 70's, he is in medicine, but not a physician. Thank you!

[LBKCLU]

You might want to reach out to Josh Mettle (an advertiser on this site of which I have no financial relationship) as he is a mortgage broker and familiar with many Doctor Loan programs. You can also request a copy of his book online as well.

http://physicianmtg.com/

[Zaphod]

Lovestruck wrote:

Between my husband and I we have about 370,000 in student loan debt. I am doing IBR. We do not have 20% unless we borrow from family, which I rather not do if I do not have to. We do not have much cash reserve and understood that it is best to have some left for emergencies. I will be starting my attending job in September, currently finishing fellowship. We are looking at mortgage around 300,000-350,000; my salary will be 180,000 and husband’s somewhere in mid 70’s, he is in medicine, but not a physician. Thank you!

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There is no rush to buy a house. A house is an expense (mostly hidden) and extremely illiquid with high transaction costs. Rent first while you get accustomed to your new job and see if you like the hospital/practice/area. You want some flexibility if you end up not liking any of the above or the situation isnt the best. Very unlikely you will regret renting first and building up a little emergency fund/down payment first. It doesnt need to be 20% necessarily, but still.

Transaction costs and no equity basically doom your house to being a big loss if you sell within a decade, and I'll just go ahead and assume no crazy appreciation since it cannot be counted on.

[Spanky]

I can't agree more with Zaphod.  There is little downside to renting, at least temporarily.  If you are moving to a different community, renting allows you to get a feel for the neighborhoods and the local housing market.  Of course, if you are remaining in your same community, this is not applicable.  Renting will also allow you to survey the available housing inventory over time, and not force you into whatever is available.  I rented when I took my first job.  We bought a house after 1 year, and ended up in the community for 8 years (and after a 5 year sojourn, we are back in this same community again, but that is another story!).  We got a better house in a better neighborhood for us since we were able to wait and look.  Save some $$ and take your time.  And good luck!

[Lovestruck]

Thank you for the perspective. We will be moving to a place where our family is located so our goal is to stay in the community long term; though I guess you never know. It is also the place where we grew up and are familiar with the neighborhoods we are interested in as well as school districts, etc. Does this change your recommendation? I think we see pretty tired of renting and moving, especially my husband.

[Zaphod]

Lovestruck wrote:

Thank you for the perspective. We will be moving to a place where our family is located so our goal is to stay in the community long term; though I guess you never know. It is also the place where we grew up and are familiar with the neighborhoods we are interested in as well as school districts, etc. Does this change your recommendation? I think we see pretty tired of renting and moving, especially my husband.

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I understand, I moved across the country 3 times, twice in one year (fellowship). It sucks. I do not regret waiting, maybe we should have even waited longer, idk. You dont really know anything for sure unfortunately, but obviously your setup puts the incentives to staying. A 350k house is in the range of your forever house (ie, greater than 10 years)? Sounds wildly low, and with a high likelihood you "outgrow" it, but hey Im in Cali so maybe thats not a stretch.

[Steve]

One of my partners planned all through med school, residency, and fellowship to go back to his and his wife's hometown.  The practice there even paid him through training.  He was the golden boy who was destined for that job.  But it turned out to be a disaster.  They bought a house and remodeled it as soon as they arrived there.  They left that town after about 2 years.  It took well over a year to sell that house, and he had to bring $75K to the closing table.  Ouch.  You never know what a job will be until you are in it.

I rented for 10 months before purchasing.  I agree with what everyone says above.  I wish we had rented for closer to 2 years.  Owning a larger home has a crazy amount of expenses (maintenance, updates, furniture, taxes, utlities, etc) that most people underestimate.  It is so much more comfortable to have some money saved up and cash flowing prior to buying a house.

[childay]

Just because you know the area doesn't mean your jobs will work out.  Steve gives a great example above!  We rented for about a year and would have done longer but they wanted to sell the rental forcing us to move.

[The White Coat Investor]

Just wanted to make sure you've seen this page:

WCI Doctor Loan Page

Lots of options for doctor loans.

A doctor loan can be reasonable to use if you have a better use for your money than a downpayment such as maxing out retirement accounts or paying off high interest rate student loans. If it helps you get into a house a year or two earlier that you're going to be in for 15 years, then I think it makes sense.

However, many doctors, perhaps partially because of the availability of doctor loans, buy when they should be renting. My usual recommendation is to rent until the job and your social situation are stable, and even then only in areas where it makes sense. As a general rule, docs in training or in the military should rent. As a general rule, docs in their first year out of residency should rent. As a general rule, docs who know they won't be somewhere for 5 years should rent.

However, very few med students, residents, attendings and especially their spouses like to hear this. For some weird reason, people don't feel like "they've made it" until they have a mortgage. It makes very little sense once you've been through it, but I'd be lying if I said I didn't make that mistake. In fact, I made it twice. It makes it even harder when some people ignore this good advice and thanks to luck end up coming out okay or even well afterward.