What keeps the 20-something professionals from owning their own homes and apartments? A recent survey of the doctors in the USA shows that they do not finish paying the mortgage of their own homes or manage to buy an apartment by the time they are in their late 30s. In the last two years, the number of institutions lending helping hands to medical school graduates has increased significantly. These individual mortgage products are ideal for the doctors just starting their career. Contrary to what a lot of people believe, doctors do not earn a lot when they begin working as residents. They have multiple loan payments, little income, and almost no savings. Their net worth is mostly negative when they start attending.
How is physician home loan making home ownership smoother for a doctor?
It is impossible for a physician to qualify for regular home loans. They do not have enough personal credit score or annual income to assure the banks and financial institutions of their ability to pay the amount back. Conventional home loans require the potential homeowner to invest about 20% of the net worth for sanctioning the loan. At the same time, physician home loan has made the situation a lot easier for them. Their down payment ranges lower than 10%, and there is no private mortgage associated with the process.
Plan wisely for a brighter future
Physician professional loans only require the employment contract as proof of income and not payment stubs like conventional lines of credit. If you are looking at the end of residency, you must be worrying about paying off your student loans already. However, if you have enrolled in an income-based, pay-as-you-earn federal repayment program, it should cap your payments between 10% and 15% of your monthly income. That should make repayment of your student loan much more relaxed than before, especially if you have an amicable home-loan plan. Home loans for physicians are helpful for doctors, who are planning to relocate after the end of residency.
Do check the interest rate of your physician home loan
Another considerable advantage of a physician home loan is its fixed interest rate. Instead of outsourcing loan design, repayment and management, the banks take care of a majority of the professional loans by themselves. They take charge of the underwriting and repayment. As a result, these loans are amenable towards medical professionals and ideal for their professional demands. However, all the convenience comes at a charge slightly higher than the regular home loans and auto loans. If you are thinking of taking out a home loan, you are looking at paying about 1% more in interest than the borrowers of regular loans.
A loan is a personal decision
Sometimes, finding a bank or a reputable lending institution that will agree to grant a new credit to a resident can be difficult. In case you are facing difficulty in locating such a source, you should give your finances another look. Are you cutting it too close with your monthly personal expenses and loan payments? Are you a high-risk candidate for the banks? Is it at all smart for you to take charge of new monthly payments? Physician loans do make it easier for doctors to buy a home, but that does not mean it is a smart financial decision for you right now.
August 8, 2018