Physician Mortgages?

[ladymoreta]

Please help me agonize over some decisions... We are still trying to decide if we want to try to buy when our lease is up in July, at the end of the year, or next July. (We're assuming we could go month to month on our rent or sign a 6- or 12-month lease. We haven't talked to our landlord yet.) We want a 4-bedroom, and none of those that I've liked would be under the FHA limit for our county, so we would need at least 5% down. We could probably have it by the end of this year, but that would mean putting off paying more on some of our higher interest debt. (We have some in the 18-20% APR range - ick!) We could easily have it by next July, but that would be another year of paying rent. Fortunately, we like the house we're renting, though.

So... I remembered that some of you have used physician mortgages, and I looked into a couple of banks that have them for our state. I don't have rates yet, or even know for sure that we'd qualify. What are your experiences with these mortgages? Would we be better off renting for another 6-12 months to save up a down payment, or is it better to go ahead and get into a house we're buying? Is it worth prioritizing a down payment over paying off the high interest range debt?

If it helps... I've fallen in love with a house! We haven't looked at it in person, of course, but it looks so pretty!
http://www.realtor.com/realestateand...0_M88252-16196

[bokelley]

I have nothing to offer but that house is fantastic. !!

[SuzySunshine]

I don't know if they have branches in Texas, but the Stillwater National Bank in OK has physician loans - but personal and mortgages. We used them for a personal loan and had a good experience. I think if you can get the down payment together you're more likely to get lower rates now, they can't keep falling. And if they do you can always refinance.

Great house!

[ladymoreta]

Ooh, we used them for a loan for relocation and getting our house ready to sell... I didn't think about them being available in TX. Thanks, SS!

[SuzySunshine]

Well they are in OK and KS, so maybe TX too??

[ides]

Wow. Giant house and yard! Neat. I would say rent until you have the down payment of 20%. I know that's a lot but will save you on your mortgage. We did 20% but also spent less and don't have our emergency fund yet and aren't paying extra on loans yet either. So, can't say we aren't taking a risk, just a different one.

[Vanquisher]

I'd try to get pre-approval for a physician mortgage and see what interest rate you can get. I think that rates are comparable, and I believe in not putting things off. I think in a year from now interest rates can only go up.

[Pollyanna]

Here is the payment on a $300k mortgage at 4% vs 6.5% $1432 vs $1896. Over a 30 year period that is more than $165k in extra payments.

I would get pre qualified and then run all the numbers to see what is the best in the long run. I would also plan for interest rates to go up.

Love the house!!!

[GrayMatterWife]

Wow. Giant house and yard! Neat. I would say rent until you have the down payment of 20%. I know that's a lot but will save you on your mortgage. We did 20% but also spent less and don't have our emergency fund yet and aren't paying extra on loans yet either. So, can't say we aren't taking a risk, just a different one.

This. It's just a house. Wait until you have 20% down AND you have paid off your high interest rate debt (20%--ouch..._).

[MsSassyBaskets]

No advice, but gorgeous house!! If that's what $300k will get you in TX I may need to reconsider my dedication to the North. Someday.

[ladymoreta]

No advice, but gorgeous house!! If that's what $300k will get you in TX I may need to reconsider my dedication to the North. Someday.

It's a really good price even for here. We're paying about $700 more per month to rent a smaller place than the payment estimate (but I don't think that includes taxes and insurance).

[TigerLily]

We just did a Physician mortgage through Regions, with no downpayment, and our interest rate was 3.5 something... I'm not really good with money matters, but our financial advisor told us that is wasn't a problem not to put a downpayment on a house. I can't remember his reasoning, but it made sense. Anyway, I also don't believe in putting things off. If you think you'll stay there for a long time, more than just a few years, I say go for it! It is an amazing house!

ETA: My husband just explained it to me, and I still am only a little so so on it, he's throwing around words that I didn't know went along with money, but I think he ended with saying that it's better to put that money into a mutual fund or something like that, so it's making you money?

[ladymoreta]

Regions is one of the ones that I am waiting on rates for. That's great!

[JDAZ11]

We've looked into it recently. You wouldn't need a down payment for any that I have looked into - most require 5% down after 500k or 650k, then 10% after 750 or 850. For us the biggest factor is that they will let us use gift funds for closing costs (which are absurd where we are moving), down payment, or both. There are also better options if you have been out of training a year.

The rates they have been giving us have been pretty good - all under 4, but above 3.5 (i think). Higher than you'd get for a conventional, but still amazing in the grand scheme of interest rates.

We have great credit scores despite student loan debt, but I think our scores only mattered for much higher loans.

That is an amazing house for that price!!! I wish we could find that kind of deal where we're moving!!

[MrsK]

The advantage to having a down payment is that you are less likely to be "upside down" on your mortgage if the property's value goes down. By upside down, I mean having a mortgage for more than the house is worth. For instance, if you got a $200k mortgage to buy a house for $200k and then the value of the house dropped to $180k, then you'd still owe $200k -- more than you could sell the house for and therefore you'd be "upside down." But if you had made a 10% down payment you would have taken out a $180k mortgage and you'd be okay if the property's value dropped to $180k.

Also, if your mortgage is for more than 80% of the property's appraised value, most lenders will require you to purchase mortgage insurance which can significantly add to the overall cost of the loan over time. I used to advise my clients to avoid this by obtaining a first mortgage for 80% and then a HELOC for the remainder.