Today Josh Lantz is joined by Neil Surgenor, a Physician Loans Specialist at TD Bank, and our topic of conversation is Physician Mortgages. Neil is going to tell us about the pros and cons of this doctor-targeted product.
J: How did you get into this business?
N: I’ve been in the business for 23 years, and took an interest in serving doctors and dentists.
J: What is the “Physician Mortgage”?
N: A Physician Mortgage is a $0 down loan with no mortgage insurance. Typically, when you put down less than 20% you’d need to purchase mortgage insurance, but the bank sees doctors and dentists as a low risk of default, and their income ramp up is eminent. It’s designed to help healthcare workers to buy earlier with their unique debt/credit situations.
This is also a good way to establish a relationship so that further down the line TD Bank could handle practice loans, equipment leasing, etc.
J: What are common misconceptions about the Physician Mortgage?
N: Doctors are intelligent and research on their own, but a lot of information online is outdated and frankly incorrect. Common misconceptions:
They’re very expensive
They’re high-risk
Reach out to a specialist! Much like how you would if you were having a specific ailment that needed a specialized doctor.
J: If a doctor has 20% to put down, is it better than taking advantage of the physician mortgage?
N: It’s not a matter of need, but want. A physician loan pricing is better! Save your 20% down and let it grow in the market, or use your cash for other things; having liquidity is important for young doctors especially.
J: What is the process for buying a home with this?
N:
Brief phone conversation about finances, goals, where you’re wanting to live, etc.
Application/credit assessment resulting in a pre-qualification letter
Approach financial advisor to look at your budget, factoring in a big purchase
Go out into the market and see what is available, contact a realtor
J: What are adjustable-rate mortgages?
N: An adjustable-rate mortgage, also called an ARM, is a home loan with an interest rate that adjusts over time based on the market. Many people going into residency and fellowship know that they’re likely going to practice elsewhere, or they’ll grow out of their current home. An ARM allows you to save with that in mind. A 30-year fixed mortgage has a higher rate. Both 5 and 10 year ARM mortgages are lower. This on average saves about 0.5-0.75% of your interest rate.
J: What are the options at TD Bank?
N: $0 down for a house value of up to $750k. $750k-1.25 million requires 5% down payment. $1.2-1.5 million requires a 10% down payment. This threshold might be increasing soon.
There are never prepayment penalties.
Once your rate is locked in, there is a float-down feature. If the ongoing interest rate lowers by 0.25%, you have the option to take advantage of a one-time adjustment.
The Recast feature allows you to prepay and recalculate your mortgage payment based on your new principal balance.
TD bank does not take student loan regular payments into account for mortgage qualifications.
Money needed for closing costs can be gifted from a family member of the borrower or co-borrower.
With the physician loan, you can close up to 90-days before your position even starts! This allows a doctor to settle in before getting busy with work. The only requirement is a copy of your signed employment contract or signed offer letter.
J: Is there anything else important that we missed?
N: Doctors going to a locum position with 1099 pay might preclude them from qualifying from a traditional mortgage. TD has the ability to qualify a doctor with just a letter guaranteeing hours, income, etc.
If you want to reach out to Neil, here is his direct contact info:
Neil Surgenor | Physician Loan Specialist
TD Bank, “America's Most Convenient Bank”
Mailstop: NJ1-006-101 | 535 Crescent Avenue, Ramsey, NJ 07446
M: 212-933-9900
Email: [email protected]
