It’s well known that lenders provide flexibility in their underwriting guidelines for physician mortgage loans. Despite this flexibility, there still are obstacles physicians face during their mortgage underwriting process. If you’re aware of these common issues, you can address them early on and avoid unnecessary stress and even financial losses like losing a deposit during the process. This article highlights the top 3 obstacles doctors face when trying to get their mortgage approved and what to do about each one.
1. The Student Debt Factor
Almost all new doctors are carrying a significant amount of student debt. If your student debt is in forbearance or deferment, it’s critical to get information about what your actual payment will be once it goes into the repayment period. Your student loan servicer will be able to provide this information if you don’t already know. If you don’t know, many lenders will take a percentage of the balance and use that as the monthly payment, which negatively impacts your debt to income ratio. It can be up to 2% of your balance.
For example, if you $200,000 in deferred student loans, the underwriter may decide $4,000 is a good monthly payment!
2. Meeting Your Condition Deadlines
Getting any type of loan requires a lot of paperwork. The physician mortgage loan is no different. If you’re like most physicians, you’re extremely busy, and finding extra time to get through the mortgage process can be a big challenge. Despite time constraints, once you enter a contract on a property, the clock starts ticking. The lender, agent, seller, and you are responsible for hitting deadlines.
When you delay providing lender requested conditions, you can risk missing your contingency dates and open the door to having your sales contract canceled by the seller. Once you’re under contract, it’s critical you prioritize extra time to provide complete loan conditions.
3. Get Fully Approved Before you Go into Contract
Your loan officer will be able to issue you a “pre-qualification” letter based on your income and credit. While this can often be enough to get your offer accepted, it is wise to have your application fully underwritten and receive an official pre-approval. When you do this, any potential issues or questions will be discovered by the underwriter. This ultimately saves time once you get into contract on since most of the borrower conditions will have already been approved.
Once you obtain a full pre-approval for your physician mortgage, you will be armed with a competitive offer. This can be advantageous in hot real estate markets where there are multiple offers coming in on properties. With your pre-approval complete, you’ll be able to make an offer with a shorter escrow period.
