A shelter is one of the most crucial needs of any human. However, houses don’t come cheap, which is why most people live in rented spaces before they can afford their own homes. Buying a home is always a thrilling experience, and it doesn’t come cheap.
Luckily, lenders know this, so they help people like you to own homes at a profit. Medical practitioners are among the people who get great mortgage deals, thanks to their well-paying careers. If you are a practicing doctor, you may qualify for what is known as a physician home loan. Here are a few things you may want to consider before applying for a physician mortgage loan.
1. Understand the Associated Costs
As a new physician, going through the whole process of training is never an easy task. But at the end of it all, there is an attractive salary. Lenders know this, which is why many of them will pre-qualify you for a mortgage and even encourage you to apply for one.
The offer might be quite intriguing if you’ve been thinking of getting your dream home, but it pays to consider and understand the costs involved. A recent publication on Dentist Physician Mortgages explained the various benefits of using a loan calculator when getting a physician mortgage. In a nutshell, you want to have a clear picture of how much the mortgage will cost you monthly, annually, and in total for the entire term. This way, it is easier to determine if your current earnings can sustain the loan or you need to wait a bit longer.
2. Loan Principal Limit
Most people today acquire a home through mortgage loans. Conventional mortgages, however, tend to limit the amount you can borrow. Most physician loans, on the other hand, free you from the CAP on the amount you can borrow. The same goes for the interest rates and other charges like penalties on late repayments. This makes it crucial to do your research well and get your physician mortgage from the right lender.
3. The DownPayment
One of the biggest hurdles faced by mortgage borrowers is the minimum downpayment. Without the initial payment, you cannot access a mortgage. As a new doctor who has just finished his residency, qualifying for a conventional home loan can be impossible. This makes the physician loan an irresistible offer, considering that you don’t have much savings for a downpayment.
Most doctors’ loans will require none or little down payment. Also, the lender may not consider previous obligations like student loans that much while assessing your suitability. While calculating your loan costs, this is another area to pay close attention to. It can help you assess the deal or hunt for a better offer.
4. Do You Have a Family?
The other critical aspect to consider is how big of a home you need. Of course, a bigger home will often come at a higher cost, depending on the space and features included. Thankfully, a physician mortgage loan from a good provider can afford you a home where your entire family will feel comfortable.
5. Fluctuating Interest Rates
The mortgage business is governed by stern rules. This is due to the harsh economic times we have found ourselves in and many borrowers failing to own their part in paying back the loans as stipulated. This has pushed mortgage lenders to tighten their bolts, like increasing the interest rates while lending to their clients.
While borrowing from the physician mortgage lender, the interest rates could be higher or lower compared to conventional mortgages. For instance, in the year 2021, interest rates for physician loans were slightly higher than conventional mortgage loans by percentage. This is because interest rates for physician mortgages are usually adjustable rather than fixed. This difference can be colossal and may cost you tremendously over time, no matter how negligible it may seem.
Homeownership is a mark of success. It provides some security knowing your family has a roof over their heads and you are hands-free from paying rent every month. However, it often comes at a price for many people, especially when purchasing your home via a loan.
Finding a suitable mortgage to finance your home is essential. You first and foremost need to consider your financial status. Bearing in mind the above pros and cons, you can either take the loan offer or remain in the rental home as you boost your savings. You can also talk to your financial planner and weigh the options above. It will help you make the right choice that fits within your financial strategy as you walk the path towards homeownership in the latter days.