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.

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.

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.

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.

No More Bank of America No Money Down Doctor Loans

While Bank of America’s decision to discontinue the Zero Down Doctor Loan is no surprise in today’s mortgage market, the bigger question: how are graduating med students, residents and fellows and established physicians going to purchase a home today?
New physicians looking to buy homes April-June and close between May-July are out of luck with Bank of America's announcement yesterday. Or so they’ll think. But there's too many reasons not to purchase today:

• $8,000 tax credit from Uncle Sam (thanks Barack Obama!)
• Low interest rates on ARMs and fixed rates
• Supply of homes on the market
• Buyer's market: seller to pay closing costs, price concessions

Physician Relocation Specialists (www.physicianrelo.com) has a partnership with niche investors who will continue to make 100% Mortgage Loans to physicians. They clearly realize the value of a long term relationship with physicians and are willing to step up and help now.


What will graduating residents do, who are only prepared to put down 5 or 10% down? If they aren't using 100% financing (who wouldn't with the tax advantages), will they be steered to go the FHA route and pay private mortgage insurance (PMI) monthly as well as the upfront mortgage insurance premium (MIP) fee of 1.75% on FHA loans? MIP is charged on all FHA loans, regardless if your LTV is 1% or 97%. What about physicians buying homes that require loans above FHA limits, and don’t have the 10, 15, or 20% down payment, depending on which market they are buying in?


Well, there is excellent news for all physicians, whether they are graduating med school, completing residency or fellowship, or have been working for 20 years. Physician Relocation Specialists has partnered with an investor that offers a true zero down doctor loan, in all 50 states, with NO PMI and fantastic rates. Yes, zero down loans up to $1M and beyond.
When physicians apply for relocation services, they’ll be connected to one of our niche investors. They will then apply for a zero down, 100% financing, exclusive physician mortgage. Even if physicians have already chosen a real estate agent, they can still utilize Physician Relocation Specialists' services. All they need to do is provide their real estate agent's contact information so that they may become part of Physician Relocation Specialist’s Preferred Agent Network. Learn more here.


Many of physicians who initially think they’re hung out to dry by Bank of America’s news can apply with Physician Relocation Specialists. And, most should be able to leverage the $8000 tax credit - in addition to writing off mortgage interest and property taxes (always consult with your CPA).


With Match Day 2009 fast approaching, how will med students qualify with all their student debt? Again, Physician Relocation Specialists has the answer: a key relationship with an investor who does NOT count student debt against the new resident as long as it is deferred (and we all know it is, except for the people at Fannie Mae, Freddie Mac, and FHA). So graduating med students should visit www.physicianrelo.com and put themselves in a position to take advantage of zero down physician loan in addition to the tax credit of $8000 (Thanks Mr. President).

Refinancing Your Doctor Mortgage

Many physicians have reached out to us recently, as they've heard mortgage rates are declining. And it is true. Sort of.


It's too challenging to explain the entire mortgage market in this space. Remember this: borrowing 100% was, and still is, a privilege. And only a select few these days know how to achieve borrowing 100% and who to accomplish it with.


Suffice it to say, sending an email or making a call to a well informed network of physician loan specialists could be very well worth your time.


If you worked with one of the largest lenders in the nation to secure your no money down doctor loan and are being told you cannot refinance your mortgage because their guidelines have recently changed, restricting a refinance of your loan with a loan-to-value of 80% - send me an email. I'd be happy to give you a call. We have the network that may be able to help you refinance your 100% loan with another 100% loan.


I look forward to your email: cmgrubb@physicianlending.com

$1,500,000 Home Loan for MD's (Physicians)

Great news! Our network of Physician Loan Specialists offer physicians a single home loan for $1,500,000!


Yes, you read that correctly: 100% finanancing, using only one (1) loan for up to $1,500,000. The program is exclusive to MD's and requires a mid-FICO score of 660. Get this: the program even allows you to use your future income!


The company I founded is focused on creating value to you: our client. Our philosophy is to work with the highest and best qualified professionals who are constantly thinking outside the box, being innovative, and demonstrating they value your relationship.


You can find out more about additional benefits to you at: Physician Relocation Specialists