Finding the right home is a challenge for anyone, and finding a mortgage lender might just be even more difficult. There are a plethora of mortgage schemes available to the average Joe, each with its respective pros and cons. But, they are not all created equal; some plans are in fact better than others. Some plans are created with niche customers in mind, like plans for physicians, which are often extended to dentists as well. If you are a DDS or DMD, there are mortgage plans with great benefits to choose from. These plans are designed with people from your field in mind and are exclusive to your profession. Some of the benefits listed below will help you decide if these plans are right for you.
Low Down Payment
The first factor in any mortgage plan is the down payment. How much you have saved up and are able to put down when making the investment initially will affect which plans you qualify for. The down payments are measured as a percentage of the total home’s value, rather than a set figure. The national average down payment is approximately 6% of the property’s value. This can go as low as 3% and as high as 10%. With dentist physician loans, you can expect to pay below the average and, in some cases, even 0% down. This down payment value will be used to determine what your monthly mortgage value is and can help you secure a home faster if you haven’t saved up much at first.
Private Mortgage Insurance
When you apply for a mortgage, you are often required to have private mortgage insurance. This is almost always required when the borrower is on a plan to pay less than 20% of the property value as a down payment. Private mortgage insurance can cost homeowners about 1% of the home’s value every year. That is $10,000 if you have a $1M home. Dentist physician plans can exempt you from this requirement. That is an exceptional saving that should be factored in when examining your interest rates and any other financial variables. For example, if you have a rate of 5% per annum but pay an additional 1% in private mortgage insurance, your effective interest rate is actually above 5%. Many online tools can help evaluate the exact contribution this insurance adds to the overall amount you end up paying over the long haul.
Your Student Loans
Of the many factors that go into offering you a loan, or determining how much to lend you, is your student debt. With tuition costs as they are, you are probably carrying some student debt from your education. This will increase your monthly financial obligations and add to your overall financial liability. This is a key factor in generic mortgage loans. Depending on your credit score and outstanding debt, you may be refused a loan from several lenders. With a dentist physician mortgage, your student debt is not counted against you. This means that you can be greenlit for a loan where other lenders refused, or be granted a larger sum on loan compared to what may be offered by other lenders because of that debt.
Loan Limits
Lenders will not give you infinite funding. Most mortgage plans have loan limits and depending on the plan, the loan amount can price you out of your dream home. Loan limits will often factor in the value set out for a conforming loan determined by the Federal National Mortgage Association. Whether your loan is conforming or not will change some of the legalities around the agreement between you and your lender. Physician mortgages may offer you a loan well above the national set value for a conforming loan and extend you a credit up to $2M.
The benefit of a specific program for physicians and dentists is that the plan is designed with an understanding of the financial situation of dentists and doctors and has been conditioned to approve of them from the get-go. With that, they add perks because they know, depending on where you are in your career, you can get a loan from several lenders. Some perks include being able to close on a home 90 days before you start new employment. While that may seem silly at first, because you’re already employed, consider a scenario where you want to relocate and buy a home but have not begun work at your new destination. This offers you a way to not be denied a loan based on a timeline issue. By considering the factors mentioned above, you can make an informed decision as to whether a physician mortgage plan is right for you. Happy house hunting!