A Comprehensive Look at Physician Loans

If you are a medical student or just started your career in the industry, you are likely wondering if getting a loan from physician banks is a smart option. Buying your first home is an exciting experience, but you could also have stress during the process. Some people are so thrilled at the chance to become a homeowner that they overlook essential facts and get stuck in loans that don't make sense for them or their long-term goals.

Avoid that problem and discover what option is right for you by learning about physician loans and what you can expect if you take that path. You can then move forward without fear and select the option that best fits your long-term vision. Uncovering different lending options and what they mean to you is the wisest step you can take at this point.

Physician Loan Overview

Many banks give loans targeted to young professionals in the medical industry. By taking a little time to learn about them and how they operate, you prepare yourself to make the correct choice, a choice you won't later regret. Banks sometimes use software that searches colleges and compiles a list of prospective medical students.

These banks then reach out to medical students with impressive lending offers that they can't overlook. The loan offers look fantastic from the surface, and they are an excellent option for many people. You must keep in mind, though, that banks are not in business to do favors for you. Everything they do has an agenda, and your mission is to find a lending option that offers the most benefits with the least number of downsides.

Physician Loan Benefits

It's now time to go over the benefits you can get when you accept a physician loan. When you get your offer in the mail, a few things will stand out to you from the start:

No Down Payment

Same Rates for Jumbo Loans

Loans Based on Your Contract

Not Critical of Student Loans

No Mortgage Insurance

Most students fresh out of medical school don't have a lot of money, but they do have a lot of student debt to repay. These issues make it hard for young medical professionals to make a down payment on a new home, so many of them are stuck without options. Physician loans promise to help medical professionals break past that roadblock by overlooking their current debts and letting them begin for little or no down payment.

Who Qualifies for Physician Loans?

Many medical students and young professionals get offers in the mail and wonder whether they qualify for physician loans. In simple terms, you are eligible for these loans the second you sign an employment contract. The amount for which you qualify depends on the amount you earn once you begin.

Even if you are in the late stages of medical school and not yet on the payroll, you can get a physician loan if you have a signed employment contract. You will discover that some medical establishments extend employment offers to students before they are official medical experts. The simple answer is that you probably qualify for these loans if you received an offer in the mail. Rather than looking at how much money you have in the bank or your current credit utilization, banks that offer physician loans look at the amount you will likely make once hired.

Why Banks Offer These Loans

When considering why banks offer physician loans at low rates and attractive terms, it's vital to reiterate that banks are not looking to do you favors. They want to make choices that benefit their bottom line over the long run. It's no secret that medical professionals earn more money than the average person, so banks are investing when they offer you a loan.

A lot of banks won't even consider giving you a loan if you have little money and a lot of student debt. Banks that offer physician loans, on the other hand, know that you will likely be in a much better financial situation in the coming years. By offering physician loans with compelling terms, banks attract an entire market with high earning potential.

Total Loan Costs

Most new borrowers look only at the amount they must pay each month when considering their loan costs, but that is not even half the picture. Getting the most from your choice requires you to look at each expense associated with the loan you have in mind:

Interest

Closing Costs

Private Mortgage Insurance

No matter the loan type you get, you will always have to pay interest. You might not want to give it much thought, but even a small difference in interest rates can add up over a 20- or 30-year loan. Also, consider the closing costs and private mortgage insurance. With all factors equal, you can expect to pay an additional $200,000 in interest if you accept a physician loan with little or no down payment.

Considering Your Options

Some people might try telling you to pick one option over the other, but only you can make that choice. If you are in a hurry to get a home and won't mind paying extra over the next 20 or 30 years, a physician loan is an attractive option worth your attention. On the other hand, saving money and waiting to buy a home is the wise choice if you don't want to spend the extra cash in the long term.

Final Thoughts

Whether or not you should get a physician loan depends on your situation and long-term goals. Those who don't want to wait to buy a home will love the opportunity to get a mortgage with no down payment and compelling terms. But people who want to wait might find conventional loans a little more appealing.

No matter how sure you are of your choice, don't act until you look at both sides of the coin. You must take a few steps back and look at your options with an open mind, and you can then move forward with confidence and choose a lending option of which you will be proud.