Loans are confusing for everyone irrespective of their profession and annual income. It is a serious financial decision that can change the course of your life in the immediate future. Upon opening a new line of credit, you may have to reduce the number of times you eat out with your family and consider in-country vacations for a while. However, not all professions come with the same level of responsibility and commitment. Thus, there is no reason for a medical professional to shy away from exploring a few perks of doctor’s loans or physician home loans.
Why do doctors look for professional loans?
Many physicians across the country come face to face with a financial decision like this at least once. There are conventional loans that you may consider as well, but they usually bear more inflexible underwritings and stringent repayment terms. The career of a doctor is not an easy one. After pulling back-to-back shifts, you would want to catch a break. It is indeed understandable if your finances are not always in perfect order and you desire some professional assistance in maintaining your loans.
Why should you consider a professional physician’s loan?
Conventional loans are not as comfortable as professional loans anymore. Irrespective of which bank you approach, they will sell the credits to the GSEs. It is easy to see how each loan has almost the same underwriting. All forms of conventional loans carry rigid guidelines regarding repayment and management. You can think of one of these loans as a product coming off the shelf at any retail store. A physician loan is a portfolio service. That means if it is a regions bank doctor loan, the bank will keep it and service it. The financial institution sanctioning the investment will take complete charge of the risk assessment and underwriting.
Here are a few reasons you should consider a professional loan instead of a traditional line of credit –
- In contrary to a conventional loan, a physician loan has a higher chance of approval. The presence of outstanding student loans and the lack of enough job time often rules out the possibility of a new resident getting a conventional loan.
- The typical physician loan has low down payments. Depending on the financial institution granting the credit, you can expect between 90% and 100% of the loan value.
- The physician loan can save you between 0.5% and 1% for PMI (private mortgage insurance). Always remember that a physician loan can avoid the PMI, but you will be paying a higher average interest rate on the loan. Physician’s home loans usually carry a 1% higher interest rate as compared to the traditional loan types.
- When you are applying for a physician’s loan, any of your unpaid student loans do not contribute to the debt-to-income ratio.
- Most financial institutions are willing to give loans of higher sums to doctors. They have higher loan limits as compared to conventional loans.
- A physician’s home loan will allow the borrower to close on a home before you even join work. That is very helpful for those starting a new career with families.
A professional doctor’s loan can help new residents transition from student life to professional life more comfortable.