- Obtain your credit report and FICO (Fair Isaac Company) score. The first thing you should do in preparation for the home-buying process is to start monitoring your credit. Start three to six months before you want to close on your new home to make sure nothing slipped through the cracks. By ‘nothing,’ I am mostly referring to your student loans.
Most physicians have several student loans through different servicers. In the shuffle or transfer of student loans, errors can and do appear on the credit report and it can be difficult to obtain information. If you are consolidating your loans, or the servicers themselves are transferring, it can be painfully slow to get things updated and the process can take months.
If you’ve moved and missed a notice because it went to your old address, the loan servicer can report you late. You may not even know that until you pull your credit report. Fixing this error can take three to six months, so don’t wait until you have 30 days to close on a home to get this done. You can pull your credit directly through the credit bureaus (I suggest you pull Experian, Transunion, and Equifax, because they are not always the same) or through your mortgage lender if you have already started the relationship.
- Start your search for a mortgage professional, using a referral or doing an online search for “physician home loans” and the state you’re moving to, or at USPhysicianHomeLoans.com. Using a referral from a colleague, financial planner, Realtor, or the institution you are going to work for is a good place to start. If you don’t know anybody, your workplace doesn’t have a referral, and your financial planner doesn’t have a referral in the area where you’re headed, do an online search. It’s really easy. You just Google “physician home loans Arizona” or wherever you’re going to be practicing. Within five minutes, you should be able to compile a list of several lenders who specialize in physician home loans. This a good place to start your due diligence in finding a loan officer, but this is just your first step.
- Contact a few lenders.
Talk to them, ask them questions, and tell them a little about your situation. It’s likely as you start up your conversations with a few loan officers that one of them will immediately have a deeper understanding of your situation and be able to talk physician language, so to speak.
Be aware that once your loan hits underwriting, it may be more complex or more problematic than others. Tell the loan officer what unique situations you have. Be very honest and specific. Let the loan officer know your down payment’s coming from your dad, you’re relocating, you have kids. It’s going to be stressful. You want to make sure that when you arrive at your new location, you’ll be ready to close and move the family into your new home. Talk through your situation and what you think might be the challenges and then allow the mortgage professional to respond and offer advice.
Good mortgage professionals, the physician mortgage experts, will understand IBR and student loans. They will ask about your new employment contract and whether it’s based on salary or production. You’ll find that they understand and describe your situation even better than you do, because they have guided clients through this before and they ask questions that you haven’t thought about. These are all good signs that you are dealing with someone who has worked with physicians in the past. You want to connect with someone like that to start going down the credit- and income-approval process.
- Check your loan officer’s reputation.
Selecting the right professional loan officer is a big decision. You’re about to risk money and the mental sanity of your family as you relocate across the country to your new home, and you have a lot at risk. Do your due diligence: ask the hard questions, study the mortgage professional online, and make sure he or she is an expert. If you are not sure, ask for the names and numbers of the last three physicians the mortgage professional worked with. If the mortgage professional balks, he or she is not the expert you are looking for. Move on and keep looking.
You can check mortgage professionals’ reputations through a couple of sources. I would recommend you Google their name and always ask for past physician client testimonials. I think that is very important, because you get a feel for not only what the loan officer says but also the viewpoint of their clients who have gone through the process. Those former clients have firsthand experience of the lenders’ level of service.
A loan is more than just rate. It is about whether that loan professional can get you the loan product he or she has promised to deliver without driving you mad. For instance, one way a loan professional can drive you mad is by asking at the very last moment for a bank statement or a W-2 from two years ago that’s at your parents’ house somewhere. That’s not what you want to hear when everything’s packed in the U-Haul and you’re supposed to move your family into your new home tomorrow.
Consider two things:
- the level of service, communication, and responsiveness of the mortgage professional during the transaction
- the ability of that professional to get you into your home seamlessly
The level of service can’t be measured through a good-faith estimate. The only way you can measure it is through the experience of the clients the mortgage professional has served. So check the mortgage professional’s reputation, check testimonials, and ask to talk to past clients if need be.
- Organize your financial documents. Have two years of tax returns or school transcripts (if in school within the past 24 months) available, your new employment contract or offer letter (signed or unsigned), information on your student loans servicer(s), source of down payment, and anything else you think prudent or unique to your situation.
You want to move toward a full credit and income approval. Loan officers in different areas of the country may not use that exact term, but I would recommend that you insist on your documents getting all the way to the underwriting level. That’s the safest approach to make sure you’re not going to have a problem or be surprised when you’re relocating across the country.
- Notify the loan officer of any changes in income, job status, or credit. This is huge! Don’t change anything once you have your credit and income approval. Be disgustingly thrifty before you close on your home. Afterward, take the vacation and buy the furniture, if you must.
If there are changes, notify your lender right away. Anything that changes your income, liabilities, or credit can affect your approval. For example, if your employment start date changes or if you decide to take a vacation and put the cost on a zero-interest Discover card, talk to your lender. Do not try to hide any financial or employment changes, as this will likely come back to bite you at the last minute. Once you have that credit and income approval, you should lock down your credit. Don’t make any major purchases and don’t open any new accounts or close any old ones. Your mindset should be, “I’m currently approved and I am not doing anything until I’m in my home.”
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