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A Basic Review Of Physician Loans

By Author: National Capital
Total Articles: 2

If you’ve recently graduated from a competitive professional school with an advanced degree and a lot of potential, you may find that you have a lot of debt and not much money in the bank. At the same time, you may be anxious to purchase a home or start a family. What can you do to obtain a mortgage or funding for similar milestones? One option comes in the form of physician loans. Lenders often recognize that professional graduates have a lot of potential for earning a comfortable income. These lenders may be willing to offer loans, traditionally geared toward young doctors, but now available many other health professionals.

Enjoy the Advantages

The benefits of physicians’ loans are that they are available without much down payment. You may even be able to get one of these loans without any down payment at all. You can get these loans without having Private Mortgage Insurance in place, which is really good news for those professionals just entering the field. A huge advantage to these loans is that the lender does not factor in your student loan debt and after medical school, you’ll probably have a lot of debt. Finally, you can use a job offer or brand new contract as proof of the amount of money that you’ll be making.

Understand the Disadvantages

Of course, there are also some drawbacks to seeking physician loans. The first disadvantage is that the loans are only available to a small group of people, graduates who are at most 5 or 10 years out of school. You can also expect this type of funding to come with a higher interest rate and more fees than traditional loans. The type of home you hope to purchase may be limited by the loan. In some situations, if the lender is a bank, you may be required to open a checking account or a savings with the lending institution.

Why Lenders Are Eager to Offer the Loans

Why do lending institutions offer physicians’ loans? The primary goal for these lenders is the chance to do business with professionals who will make their payments on time. The lenders are looking for borrowers who will maintain a good relationship with the bank or institution for many years to come. Because health care professionals tend to have a lot of earning potential, banks and other lenders are interested in attracting their business. In some cases, the lenders will also offer premium services and rates.

One Last Thing

Before you make a decision about this source of funding, be sure that you understand both the advantages and disadvantages. You should also carefully review your plans. If you plan to sell your home within a couple of years, the mortgage you obtained through physician loans could become a burden. On the other hand, if you’re comfortable with paying a higher interest rate because you have no down payment, this loan may be the very thing you need. Consider at your income potential and the length of time you plan to stay in the home. Only you can determine whether this plan is good for you.

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