The Bank of America Doctor Loan is the most widely referenced and recognized loan program of its kind. When Bank of America canceled their program in March of 2009, many physicians were challenged to find alternate home loan solutions that would provide them with perks like no money down and no PMI.
We are pleased to announce that Bank of America has launched their Doctor Loan Program in all 50 states as of August 9, 2010. Below are the features of the Bank of America physician loan:
Who is eligible?
- Medical residents
- Existing or new licensed Medical Doctors (MD)
- Doctors of Dental Science (DDS)
- Doctors of Dental Medicine (DMD)
- Dental Surgeons specializing in oral and maillofacial surgery (DMD)
- Doctors of Optometry (OD)
- Doctors of Opthalmology (MD)
- Doctors of Podiatric Medicine (DPM)
- Doctors of Osteopathy (DO)
How much can I borrow, and how much do I have to put down?
- Loan amounts up to $850,000
- 95% LTV (5% down required)
While most physicians will be able to secure 95% financing through Bank of America, certain housing situations will require more money down. Factors like housing type, geography and declining markets may cause down payment amounts to go up. For example, physicians looking to buy an attached home (condos, townhomes, PUDs) in Florida will be required to put 20% down due to the state’s challenged real estate market.
What kind of loan products are available?
- 30YR Fixed
- 15YR Fixed
- 7/1 LIBOR ARM
- 10/1 LIBOR ARM
What are the reserve requirements?
Reserve requirements for loan amounts less than or equal to $625,500 require four (4) months principal, interest, taxes insurance and assessments (PITIA); loan amounts greater than $625,500 require six (6) months PITIA
Some other important things to note:
- Deferred student loans don’t apply to debt-to-income ratio
- You can use future income, as long as your employment start date is within 60 days of closing.
- Using future employment to qualify also requires additional reserves.
- The minimum 5% down required must be from your own funds. You can use gifts, however, for closing costs and reserves.
- The minimum credit score for all applicants is 720. If you and your spouse both apply, you both need a mid-FICO of 720.
Depending on your unique situation, certain restrictions to the above guidelines may apply. If you are interested in a physician loan, contact Physician Relocation Specialists. We can put you in touch with a mortgage banker who specializes in the physician loan at Bank of America.
Monday, August 9, 2010
Friday, June 11, 2010
Your Credit Score and the Physician Home Loan
Whether you are interested in a physician home loan, an FHA loan or a conventional mortgage, determining your credit worthiness (called a FICO Score), is a necessary first step. If you wish to qualify for a physician loan, it’s important to understand what a FICO score is and how it’s calculated.
There is often much confusion about how these scores are calculated. The data used in your credit report to calculate the score can be grouped into five different categories.
Category #1 Payment History (35% of your score)
It’s the number-one rule to having great credit: pay your bills on time. Payment history makes up 35% of your credit report, and breaks down into a few sub-categories:
• Account payment information on certain accounts such as credit cards, retail accounts, installment loans, medical school loans, mortgage, etc.
• Adverse public records such as bankruptcy, judgments, liens, wage attachments, collection items, and/or delinquency
• Length of the delinquencies
• Amount past due on delinquent accounts or collection items
• Recency of past due items, adverse public records, or collection items
• Number of past due items
• Number of accounts paid as agreed
Category #2 Amounts Owed (30% of your score)
Your existing debt also plays a large part in your credit report. However, with the physician loan, doctors are able to have all deferred student loans waived from their debt to income ratio. Other types of debts (mortgages, credits card debt, etc.) are still included in your amounts owed.
• Amount owing on accounts
• Amount owing on specific types of accounts
• Lack of a specific type of balance, in some cases
• Number of accounts with balances
• Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Category #3 Length of Credit History (15% of your score)
This is pretty straightforward: how long has your credit been established?
• Time since accounts/loans opened
• Time since accounts/loans opened, by specific type of account
• Time since account activity
Category #4 New Credit (10% of your score)
Constantly opening new accounts can be damaging to your credit score. Managing your existing debt and avoiding opening new accounts can positively impact your credit score. The areas examined in this category are:
• Number of recently opened accounts, loans, and proportion of accounts that are recently opened, by type of account
• Number of recent credit inquiries
• Time since recent account opening(s), by type of account
• Time since credit inquiry(s)
• Re-establishment of positive credit history following past payment problems
Category #5 Types of Credit Used (10% of your score)
This category takes a look at what kind of accounts you’ve got. A mixture of accounts usually generates better scores than reports with only numerous revolving accounts (credit cards).
• Number of various types of accounts (credit cards, retail accounts, medical school loans, mortgages, etc.
A few other things to note:
• A FICO score takes into consideration all these categories of information, not just one or two.
• Many banks offering the physician loan require a minimum FICO of 680. While there are some exceptions, it is extremely important to be aware of your credit score and manage it accordingly.
• The importance of any factor depends on the overall information in your credit report.
• Your FICO score only looks at information in your credit report. However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
• Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your FICO credit score.
• Most lenders offering the doctor loan will not count student loans from medical school against the physician to determine qualifying ratios.
To learn more about how your credit score can impact your ability to secure a physician home loan, contact us.
There is often much confusion about how these scores are calculated. The data used in your credit report to calculate the score can be grouped into five different categories.
Category #1 Payment History (35% of your score)
It’s the number-one rule to having great credit: pay your bills on time. Payment history makes up 35% of your credit report, and breaks down into a few sub-categories:
• Account payment information on certain accounts such as credit cards, retail accounts, installment loans, medical school loans, mortgage, etc.
• Adverse public records such as bankruptcy, judgments, liens, wage attachments, collection items, and/or delinquency
• Length of the delinquencies
• Amount past due on delinquent accounts or collection items
• Recency of past due items, adverse public records, or collection items
• Number of past due items
• Number of accounts paid as agreed
Category #2 Amounts Owed (30% of your score)
Your existing debt also plays a large part in your credit report. However, with the physician loan, doctors are able to have all deferred student loans waived from their debt to income ratio. Other types of debts (mortgages, credits card debt, etc.) are still included in your amounts owed.
• Amount owing on accounts
• Amount owing on specific types of accounts
• Lack of a specific type of balance, in some cases
• Number of accounts with balances
• Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Category #3 Length of Credit History (15% of your score)
This is pretty straightforward: how long has your credit been established?
• Time since accounts/loans opened
• Time since accounts/loans opened, by specific type of account
• Time since account activity
Category #4 New Credit (10% of your score)
Constantly opening new accounts can be damaging to your credit score. Managing your existing debt and avoiding opening new accounts can positively impact your credit score. The areas examined in this category are:
• Number of recently opened accounts, loans, and proportion of accounts that are recently opened, by type of account
• Number of recent credit inquiries
• Time since recent account opening(s), by type of account
• Time since credit inquiry(s)
• Re-establishment of positive credit history following past payment problems
Category #5 Types of Credit Used (10% of your score)
This category takes a look at what kind of accounts you’ve got. A mixture of accounts usually generates better scores than reports with only numerous revolving accounts (credit cards).
• Number of various types of accounts (credit cards, retail accounts, medical school loans, mortgages, etc.
A few other things to note:
• A FICO score takes into consideration all these categories of information, not just one or two.
• Many banks offering the physician loan require a minimum FICO of 680. While there are some exceptions, it is extremely important to be aware of your credit score and manage it accordingly.
• The importance of any factor depends on the overall information in your credit report.
• Your FICO score only looks at information in your credit report. However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
• Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your FICO credit score.
• Most lenders offering the doctor loan will not count student loans from medical school against the physician to determine qualifying ratios.
To learn more about how your credit score can impact your ability to secure a physician home loan, contact us.
Wednesday, June 2, 2010
What is a Declining Market?
So you've been told by a lender that the market you're buying in is a declining market—but what exactly is a declining market? And how will it affect your mortgage?
Declining markets - defined.
Surprisingly, there is no standard definition of a declining market. This means that while one lender may consider a city a declining market, another may not. In simple terms, an area is flagged as a declining market when the value of the housing market is reduced by conditions such as lower comparable sales and listings, short sales and foreclosures. Lenders deem these areas both risky and problematic because of their falling prices and higher rates of default.
Who decides what markets are declining?
In most cases, it is the job of the appraiser to define what constitutes a declining market. Then it is up to the lender to determine if the home's appraisal accurately reflects market conditions. The lender will then let the borrower know if the home they are looking to purchase is in a declining market.
What are the consequences of moving to a declining market?
The most immediate consequence of purchasing a home in a declining market is that you'll need an additional 5% down (on top of your existing down payment). So, if you're planning on putting 10% down, but are buying in a declining market, you will need to come with 15%.
To find out if the are you're moving to is considered a declining market—contact Physician Relo today.
Declining markets - defined.
Surprisingly, there is no standard definition of a declining market. This means that while one lender may consider a city a declining market, another may not. In simple terms, an area is flagged as a declining market when the value of the housing market is reduced by conditions such as lower comparable sales and listings, short sales and foreclosures. Lenders deem these areas both risky and problematic because of their falling prices and higher rates of default.
Who decides what markets are declining?
In most cases, it is the job of the appraiser to define what constitutes a declining market. Then it is up to the lender to determine if the home's appraisal accurately reflects market conditions. The lender will then let the borrower know if the home they are looking to purchase is in a declining market.
What are the consequences of moving to a declining market?
The most immediate consequence of purchasing a home in a declining market is that you'll need an additional 5% down (on top of your existing down payment). So, if you're planning on putting 10% down, but are buying in a declining market, you will need to come with 15%.
To find out if the are you're moving to is considered a declining market—contact Physician Relo today.
Saturday, May 22, 2010
Avoid Conflicts of Interest When Buying a Home
If you are looking to buy a house, beware of simply using the real estate agent who is listing the house you’re interested in. The idea that you will get a better deal by not having your own agent to represent you in the transaction is simply false.
Remember that the home owner pays the realtor fees—not the buyer. While often times the home owner’s agent may reduce their commission if the agent finds the buyer, this does not necessarily result in a lower purchase price for you. The agent listing the property has the twin fiduciary duties of loyalty and care to the home owner, not to you. Having your own representation far outweighs any perceived possibility for a reduction in purchase price.
Sure, the listing agent is technically allowed to represent both and the seller, but at what cost? The conflict of interest is unavoidable. The seller wants to achieve the highest purchase price and you want to pay the lowest possible price. How can one agent represent both interests? By using a top-notch realtor to represent you in purchasing a home, you know that you have someone working in your best interest and not the seller’s.
If you’re looking for a home, and are in need of a great Realtor, contact us. To learn more about what your should look for in an agent, visit our site.
Remember that the home owner pays the realtor fees—not the buyer. While often times the home owner’s agent may reduce their commission if the agent finds the buyer, this does not necessarily result in a lower purchase price for you. The agent listing the property has the twin fiduciary duties of loyalty and care to the home owner, not to you. Having your own representation far outweighs any perceived possibility for a reduction in purchase price.
Sure, the listing agent is technically allowed to represent both and the seller, but at what cost? The conflict of interest is unavoidable. The seller wants to achieve the highest purchase price and you want to pay the lowest possible price. How can one agent represent both interests? By using a top-notch realtor to represent you in purchasing a home, you know that you have someone working in your best interest and not the seller’s.
If you’re looking for a home, and are in need of a great Realtor, contact us. To learn more about what your should look for in an agent, visit our site.
Thursday, March 18, 2010
Match Day 2010
Well, it's official—Match Day 2010 is upon us. At this very moment, more than 15,000 medical students across the country are learning where they'll spend their post-graduate years. It's a life-changing moment for emerging physicians, one that will help shape both their professional and personal lives.
Many physicians are faced with the task of moving to another state to start their residency, presenting a whole slew of challenges. Questions like "should I rent an apartment, or buy a home?" and "what are the best school systems in my new hometown?" start cropping up left and right. Google searches shift from "best residency programs" to "doctor home loans" and "change of address how-to." It's easy to get overwhelmed.
A recent Physician Relo client remarked that "becoming a doctor is already stressful enough—and on top of it, I've got to deal with getting home financing? It's a nightmare!" Luckily, our website was her first stop, and we were able to help her secure 100% financing and set her up with an awesome Realtor® in Cincinatti. The only downside is that she'll probably be spending more time in the hospital than her new townhome.
This snippet from an NPR essay by Match Day author Brian Eule captures the essence of the journey new residents are about to embark upon:
"Just three months from Match Day, they fill the halls of hospitals, responsible for patients and learning the aspects of medicine that school could never teach them. Lives begin and end in front of their eyes. Days blend into one another, in 24-hour shifts and 80-hour workweeks. Spouses are left alone, sleep is disregarded, and healthy habits often abandoned. They enter one of the most taxing professions, one that will demand everything of them in these first years, and hopefully train them to be the caring, competent people the rest of us turn to for our well-being."
The entire Physician Relocation Specialists team is in awe of the undertaking doctors endure as they continue on their paths to successful careers in medicine. We are in your debt, and we are so happy to be able to help you along the way. Congratulations.
To learn more about the physician home loan or to get connected with a Realtor® in your destination city, contact us.
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