As a physician, qualifying for a home loan can be difficult. You have unusual challenges that most mortgage underwriters are not used to seeing such as student loans, match agreements, employment contracts, and down payments coming from gift sources.
All of these things add complexity to a mortgage application and can result in you being declined for financing. However, it’s important to know that all physician mortgages are not the same – what might be a roadblock with one lender could be a green light with another. There are solutions out there for you!
Below are six steps to a flawless home loan process. If followed, we believe this will result in a 99% success rate in getting your home offer accepted. You almost can’t fail if you follow this process carefully.
1. Choose a Mortgage Professional Who Can Educate and Truly Guide You
If you just do one thing, ensure you start off on in the right direction by locating a mortgage professional who has experience with medical professionals and has done a good job with them 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. Medical Professionals often run into trouble when they think that there is no reason that they shouldn’t get financing.
For instance, the resident who was able to get a home loan back in 2006, before the mortgage meltdown, and who is now making significantly more money may think that getting a home loan today should be easy and one that any bank would finance. However, the physician may not be taking into consideration all of the factors, such as being a 1099 independent contractor, or closing on the new home prior to starting the new position. Both of these factors would throw a huge wrench into 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 complexity in 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. That person has seen all the same challenges before and has an arsenal of outside-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. If you don’t get a good vibe or you’re not sure, I’d advise you to keep looking or ask to speak with a few of their past physician clients.
Once you’ve identified several loan officers in your area who appear to be experts, who have testimonials, and who look as if they serve physicians on a regular basis, the next step is 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 focus on the mortgage professional you are interviewing. Let that person know about any challenges you can see, such as student loans, relocation to a new state and/or job, your source of down payment, and ask 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. I advise you insist upon a full credit and income approval. I cannot emphasize enough the importance of getting all credit and income documents into the hands of an underwriter as early in the process as possible.
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–dad situation where the underwriter and loan officer meet in the middle. It’s like a parent–child situation, and the parent in this situation is the underwriter. That’s where the buck stops. Get all of your income, new employment contracts, 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 steps of the six steps to a flawless home purchase, you should be in great shape. The only way you could be more prepared to buy a home is if you had the money in the bank and were prepared to write a check for the entire purchase price. But there are a few more things you can do to ensure the rest of your transaction is flawless.
4. Carefully Select Your Realtor
Your Realtor should, preferably, not be just someone who’s qualified in helping the average person move across town. You are looking for someone with relocation experience, ideally physician relocation. You should be able to find such Realtors through an online search, via referral from the medical department you are joining, a colleague who has recently relocated to the area, or a referral from a loan officer specializing in physician home loans. If you can’t find a Realtor with experience in physician relocation, then the next best thing is a Realtor who specializes in relocation, because that person will have more specialized knowledge of the potential pitfalls and be attuned to serving clients remotely.
Remember, the timing of your employment contract start date, relocation, and remote closing all add complexity to the transaction. The Realtor who is the biggest short-sale or foreclosure specialist in the county might be capable of doing amazing things for his or her short sale clients.
She or he may be busy and sell more homes than anyone else. However, that same busy Realtor, if not experienced in the nuances of relocation, is more likely to forget the remote closing timeline and leave you keyless on move-in day. I see it much more frequently than anyone would like.
A great Realtor will plan the transaction with you, pull out a sheet of paper, talk through all the dates with you, and literally map out the transaction. That way, when he or she is structuring the off er and the deadlines, everything flows and matches, so you don’t get to the end of the deadline, and realize your family is homeless for two weeks because of a delay on the seller’s side or because the Realtor and loan officer were not in communication about when your loan could close.
5. Stay in Communication
Make sure everyone has the same dates in mind for the loan approval, wiring of closing funds, loan document signing, and move-in date. This is especially important for relocating physicians, who often have movers scheduled and a relatively short timeline to move in and get settled before starting their new position. Make it a point early in the transaction, even before you write up your offer or go house hunting, to get your loan officer and Realtor on the same page. It is important that these two advisors are in communication about loan type, financing, and appraisal deadlines, as well as the all-important closing and move-in date.
What can happen in the transaction is that everybody gets focused one thing, such as the appraisal, or the outstanding final signed employment contract, and they take their eye off the relocation part of the transaction and end up missing a date.
If you get into the habit of staying in communication with your Realtor and loan officer throughout the transaction, you’ll prevent a lot of problems. It is as easy as fi ring off an e-mail to both parties saying, “Hey, team, I’m selling my house on Wednesday and I’ll be in Ohio that day. I need to move in and have keys Friday afternoon for the Arizona home. Everybody on board, do you see any problems with those dates?”; “Hey, did you get everything you need from me? Is there anything else you need?”; “My financing appraisal deadline is coming up this Friday. Just wanted to make sure that was on everybody’s radar and we were not going to have any problems with that.”; “Hey, team, just verifying that the financing and appraisal deadline is next Monday, which means my earnest money is nonrefundable. Can you confirm we are good to pass this date?”; or, “Hey, team, closing deadline is a week away. I’m confirming that everything is set and my family will be in a moving van on Wednesday.” For anything having to do with deadlines or the dates when you will be traveling, I would recommend being in direct communication with both the Realtor and the loan officer.
The frequency of your communication may vary depending on the transaction, but I think once or twice a week is probably the recommended dosage. That’s not too much and not too little. If you send communications a couple times a day or daily, you’re going to drive everybody crazy.
Even if you are working with a great Realtor and loan officer team, keep in mind that things happen. The loan processor goes on vacation, the kids get sick, real-life stuff happens, and things can slip through the cracks. As a consumer, if you’re not communicating what your expectations are with the deadlines, you’re leaving yourself open to possible mistakes.
6. Be Proactive
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 as the buyer, and all you have to do is to be aware of your inspection, appraisal, financing, and settlement deadlines. I find most homebuyers rarely know that deadlines in a purchase agreement even exist. It’s extremely seldom that we get any kind of communication from the client following up on these dates. Typically, this is because their Realtor rushed through the purchase agreement and did not bring it to the client’s attention.
But at the end of the day, this is on you. You are the one who is risking your earnest money. You can do this simply by paying attention to the dates in your purchase agreement and set yourself reminders to follow up with your real estate and mortgage team before the dates are upon you and your money is lost.
Follow this advice and you have a 99 percent chance that your transaction will be a flawless and enjoyable one!
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