Mortgage for docs in Cincy

[Colinator]

Hey all,

Planning (hopefully!) to move to Cincinnati for residency and purchase a house. With zero money, what are my options? No BoA branch, ING requires downpayment. At least I have a fabulous credit score . . . so that won't be a problem. Anyone know of other mortgage programs with zero down for physicians?

Thanks!

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[Dr.Dicky]

We just did an interest-only, 5/1 ARM, zero down, no pmi, and they rolled closing costs into the loan.

pm me if that sounds like what you are looking for.


Edit: BoA, Countrywide, Wells Fargo, and some other doctor loan programs were all given the chance to match the loan we recieved, and they could only "come close".

 

[mshheaddoc]

Compass bank or Doctor Loan also read through the mortgages thread here at the top of this forum as it was moved from the general residency forum.

Oryou can try to go conventional with FHA or something of the likes. Some of these "doctor" loans rip you off with some of the fees and interest rates. I'm kinda surprised that you may be able to get a better deal at one of the bigger mortgage companies (ie countrywide, wamu, phh, HSBC, etc) at least with interest rate. Many now will not include your student loans and if you can go FHA I highly suggest it. There is no PMI I believe and they are very lenient at letting you roll in closing costs and the like.

Brokers often are just the middle men which jack up your fees.

Right now we are not considering any of the doctor loans b/c of the fees as well as if you don't have a 700 credit score, some places won't even talk to you. Plus we are finding some great deals conventionally.

Right now interest only and arms are useless. Many of these doctors loans are also only 3 year fixed loans based on a 30 yr payout so your rate will be variable after 3 years which if you are moving then it doesn't matter. But make sure you really know the product before you start to apply.

Also, apply to as many as you like within a 2 week period as it won't affect your credit as much.

 

[Jocomama]

I agree with MSSHEADDOC post - we both were in the industry, and I am still involved. Very few true dr loans exist. You can use B of A indirectly by using a broker (I was a bank/broker previously).
In terms of rolling closing costs into the loan, well, you are paying for it all in the end.
I do support interest only loans on 5yr arms, but with the shortened fixed-income security curve on the 2-10yr notes, you will find 30yr fixed maybe 0.25% above a 5yr ARM. If you are sure to be out in 5 yrs, then by all means do it. Interest only if fine - since most of your "full" mortgage payment will be interest for the first 3 years.
Also - if for any chance in hell, you will not be out in 5 yrs, do not take the arm, since 9/10 5yr arms are based on a 5/2/5 scale. That means, if you are in it for year six, and it adjusts, then you are 100% at the mercy of the market. Basically, like right now, the adjustments are almost 3% above what the core rate was at 3 yrs ago. A 4% adjustable 5/1 ARM could go to 7% now, or 3% above the initial rate. a 5/2/5 means the first year, if economics are strong, the rate could move from 4% to 9% max, or 5 over on the first adjustment. Many years ago, the 5 yr arms would be on a 2/5 adjustment, which kept the adjustment to a max of 2 above the initial rate, so a 4% could NOT exceed 6% if it was adjusting this year, no matter what the economics are.

This is complicated and took me a year to understand when I first started doing mortgages,
Bottom line? Only a 5yr arm if you are sure to sell house within 5 years, and the rate is at least .25% lower than any other longer term loan, and the costs are the same.
Also - PMI - if you can avoid it whether by a single 0 down Dr Loan, or an 80-20 (2 loans at the % value of the home). Doesn't matter, since it is rare for any bank or broker to offer you a loan with PMI these days.
PM me if you have any other questions.
Otherwize, if you follow the post here by MSSHEADDOC, then you will be fine.

Hey all,

Planning (hopefully!) to move to Cincinnati for residency and purchase a house. With zero money, what are my options? No BoA branch, ING requires downpayment. At least I have a fabulous credit score . . . so that won't be a problem. Anyone know of other mortgage programs with zero down for physicians?

Thanks!

 

[Dr.Dicky]

Only a 5yr arm if you are sure to sell house within 5 years, and the rate is at least .25% lower than any other longer term loan, and the costs are the same.

Or do a 5yr arm to get you through residency (most are not longer than 5 years). At the end of those 5 years, chances are you'll be able to afford the new rates or the more likelier scenario, move to a bigger and better house. How many attendings do you know that still live in the house they bought during residency?

 

[mjzoey]

Ok, this might be reall stupid question, but what is arm? and what is these #/# arm mean? Trying to figure out how to buy a house for residency, but I don't really know what these post mean....

 

[Dr.Dicky]

Ok, this might be reall stupid question, but what is arm? and what is these #/# arm mean? Trying to figure out how to buy a house for residency, but I don't really know what these post mean....

ARM = Adjustable Rate Mortgage
5/1 means that for the first five years, the rate is fixed...after that it becomes variable and can go up or down every year after the first 5. They are really good for keeping the costs down during those first few years when you need the payments to be low.

 

[mshheaddoc]

5/1 Arms are a waste of your money right now though as the rates are not competitive at all especially compared to interest only and fixed rate loans. I'm really disappointed in the rates right now!!!!!

 

[msl2007]

5/1 Arms are a waste of your money right now though as the rates are not competitive at all especially compared to interest only and fixed rate loans.

Do you mean a waste of money if you pay a point or origniation fee? Or just in general? Do you think that interets only loans are dangerous? It seems like paying a point on a 5/1 ARM is a waste, since you only get the interest rate deduction for 5 years. Is that correct?

Also, one site I went to about FHA loans said that there is PMI if you weren't at 80% (so PMI with 100% loan.) On the main site I couldn't find anything about PMI. So I am not sure about the PMI.

My questions is, with FHA and other non-dr loans, how do they handle your income when you haven't worked in med school and you don't have a job yet, just the residency contract? anyone get no-dr loans without having a job yet.without spouse having an income?

I want good terms on my loan, but I also just want a loan, and I am worried about things falling through when they realize that I don't yet have an income...

 

[mshheaddoc]

Usually arm and interest only rates are godsends. Unfortunately I was referring to the fact that right now you won't save much money going that route unless you find a great lender and buy down your rate. Interest only and ARM rates are NOT competitive.

As for ARM/Interest only loans ... ARM's can be good if you know you are doing residency and that's it. Interest only in this market is a very dangerous deal and you really need to know what you are getting into before venturing in that market. Since we're in a buyers market with home values leveling off, some people are losing money on sales in some markets. The idea of an interest only loan is fantastic and if you do your homework it might be a great option for you but as stated, there is a risk to it. I looked into that option and the interest rates are horrible for that option right now in the areas I was looking at.

PMI will depend on the lender. There is usually so sort of PMI but every lender has various terms. I was quoted an FHA loan with no PMI. I never did gov't underwriting so I can't be sure but I'm sure a quick google might answer that question.

With FHA, usually lenders can work with you if you don't have work history with your residency contract. You can't get any of the "doctor" loans without a contract. If your spouse doesn't have income (or doesn't plan on working) they can still apply to be on the mortgage but all their debt will count against you. If your spouse is planning on relocating jobs usually lenders can work with you this. There are many different guidelines to work with some lenders have a variety of programs to try to fit you in.

We talked to a lender and we are looking to do conventional loan based on a residency contract and only one income.