At Ficzner Group, we want to be prepared to ensure that you are given the best buying experience with knowledge and expertise to guide you along the way. We are here to guide you on purchasing a brand new home in Ohio.
Today I would like to talk to you about What Questions Should Physicians Ask a Lender Before Signing a Physician Loan?
Before signing a physician loan agreement, doctors should ask the lender about the interest rate, APR, down payment, PMI, closing costs, loan limits, student-loan treatment, rate adjustments, prepayment terms, cash-reserve requirements, and all conditions that could affect approval or the final cost. Physicians should request these terms in writing and compare them with other mortgage options.
For physicians, a mortgage decision often comes during a major career transition. A resident may be preparing to start an attending position, a fellow may be relocating for a new opportunity, or an established doctor may be purchasing a home after moving to a new practice.
Because physician mortgages can have specialized underwriting features, it is important to understand exactly what a lender is offering before signing. Asking the right questions can help a physician identify both the advantages and the potential costs of the loan.
What Interest Rate Will I Pay on the Physician Loan?
Start by asking the lender for the specific interest rate available to you and whether it is fixed or adjustable.
Ask:
- What is my interest rate?
- Is the rate fixed for the entire loan?
- If it is adjustable, when can it change?
- How often can the rate change?
- What is the maximum possible adjustment?
- What is the APR?
The interest rate directly affects the monthly principal and interest payment, while the APR can provide a broader view of borrowing costs.
Is the Interest Rate Locked Before Closing?
Physicians should also ask whether the quoted rate is locked.
Important questions include:
- When can I lock my rate?
- How long does the rate lock last?
- Is there a fee for extending the lock?
- What happens if my closing is delayed?
- Can the rate change before closing?
This can be particularly important for residents and fellows whose employment start dates or relocation schedules may create timing issues.
How Much Do I Need to Put Down?
Ask the lender to explain the minimum down payment for the specific loan being offered.
A physician should also ask whether different down-payment levels change the interest rate, loan amount, or other costs.
For example:
“What would my loan terms look like with 0%, 5%, 10%, or 20% down?”
Comparing these scenarios can help physicians understand the trade-off between preserving cash and building initial home equity.
Will I Have to Pay Private Mortgage Insurance?
Some physician mortgage programs allow qualified borrowers to make a low down payment without conventional PMI.
However, physicians should not assume that every physician mortgage works this way.
Ask the lender:
- Is PMI required?
- If not, what replaces it?
- Does the interest rate change depending on my down payment?
- Are there other fees associated with the low-down-payment structure?
For additional information, see Can Physicians Get a Physician Mortgage With a Low Down Payment?
How Will My Student Loans Be Counted?
This is an especially important question for physicians with medical-school debt.
Ask:
- How will my student loans affect my debt-to-income ratio?
- What monthly payment will you use for underwriting?
- Does the program have special rules for deferred loans?
- What documentation is required?
Different mortgage programs can use different underwriting methods, so physicians should understand how their actual student-loan obligations will be treated.
Can My Employment Contract Be Used to Qualify?
Residents and fellows who have not yet started an attending position should ask whether a signed employment contract can be used to document future income.
Questions to ask include:
- Can you qualify me using my signed employment contract?
- How far in advance of my start date can I apply?
- Does the contract need to be fully executed?
- Are there restrictions on the employment start date?
- What happens if the start date changes?
This can be particularly relevant for physicians purchasing a home before beginning a new attending position.
See Can Physicians Buy a Home Before Starting an Attending Job Using Just an Employment Contract? for more on this situation.
What Are the Loan’s Closing Costs and Other Fees?
A low down payment does not mean a mortgage has no upfront costs.
Ask the lender for a complete estimate of:
- Origination fees
- Underwriting fees
- Appraisal fees
- Credit-report fees
- Title-related costs
- Recording fees
- Prepaid taxes and insurance
- Other lender charges
Ask the lender to explain any fee you do not understand.
Are There Any Prepayment Penalties?
Physicians should ask whether they can make additional principal payments or pay off the mortgage early without a penalty.
Questions include:
- Is there a prepayment penalty?
- Can I make extra principal payments?
- Are there restrictions on paying off the loan early?
This matters because an attending physician’s financial situation may change significantly over time.
Are There Cash-Reserve Requirements?
Some mortgage programs may require borrowers to demonstrate financial reserves.
Ask:
- How much cash must I have available after closing?
- Can retirement accounts count toward reserves?
- Do reserves need to remain in a specific account?
- Does the required reserve amount change based on the loan size?
Understanding reserve requirements can help physicians estimate how much cash they actually need before purchasing.
What Is the Maximum Loan Amount?
Physician mortgages may have specialized loan limits, but those limits vary among lenders and programs.
Ask:
- What is the maximum loan amount?
- Does the maximum depend on my specialty?
- Does the down payment affect the maximum?
- Does the property type affect the maximum?
- What happens if I want to borrow more than the program allows?
A physician should also consider whether a large mortgage fits comfortably within the broader household budget.
Are There Restrictions on the Property I Can Buy?
Not every mortgage program necessarily treats every property the same way.
Ask whether the loan can be used for:
- Single-family homes
- Condominiums
- Townhomes
- Multi-unit properties
- Second homes
- Investment properties
Physicians should confirm property eligibility before making an offer.
Can the Loan Terms Change Before Closing?
Ask the lender to identify every circumstance that could cause the terms to change.
For example:
- Could my interest rate change?
- Could my required cash increase?
- Could additional documentation be required?
- Could a change in employment affect approval?
- Could a change in debt affect qualification?
This is especially important when applying during a transition from residency or fellowship to an attending position.
What Happens If My Financial Situation Changes?
Physicians should ask how changes in employment, income, debt, or credit could affect the mortgage before closing.
For example:
“If my employment start date changes, what happens to my approval?”
Also ask whether taking on new debt, changing jobs, or making a large purchase before closing could affect underwriting.
What Should Physicians Get in Writing Before Signing?
Important terms should not remain only verbal.
Before signing, physicians should request written documentation of:
- Interest rate
- APR
- Loan amount
- Down payment
- Monthly payment
- Closing costs
- PMI or other mortgage insurance
- Rate-lock terms
- Adjustable-rate provisions, if applicable
- Prepayment terms
- Reserve requirements
- Loan conditions
- Property restrictions
If a lender gives a verbal explanation that differs from the written documents, ask for clarification before proceeding.
How Should Physicians Compare Different Lenders?
Physicians should compare complete loan offers rather than focusing on one attractive feature.
A simple comparison can look like this:
| Question | Lender A | Lender B | Lender C |
| Interest rate | ___ | ___ | ___ |
| APR | ___ | ___ | ___ |
| Down payment | ___ | ___ | ___ |
| PMI | ___ | ___ | ___ |
| Closing costs | ___ | ___ | ___ |
| Loan limit | ___ | ___ | ___ |
| Student-loan treatment | ___ | ___ | ___ |
| Rate-lock period | ___ | ___ | ___ |
| Reserve requirement | ___ | ___ | ___ |
| Fixed/adjustable rate | ___ | ___ | ___ |
This makes it easier to see differences that may not be obvious from an initial quote.
Should Physicians Ask About the Total Cost of the Loan?
Yes.
The monthly payment is only one part of the cost.
Ask the lender:
“How much will I pay over the expected life of the loan, including interest and upfront costs?”
Physicians should consider both short-term affordability and long-term borrowing costs.
A mortgage with a smaller upfront requirement may preserve cash today while resulting in a larger loan balance and potentially greater interest expense over time.
What Red Flags Should Physicians Clarify Before Signing?
Physicians should ask for clarification when they encounter:
- Terms they do not understand
- Fees that were not previously disclosed
- Significant changes from the original quote
- Unclear adjustable-rate provisions
- Unexpected reserve requirements
- Conditions that could affect approval
- Pressure to sign before reviewing the documents
The goal is not simply to obtain approval. It is to understand the financial commitment being made.
What Should Physicians Do Before Signing the Final Loan Agreement?
Before signing, physicians should review the final loan documents carefully and confirm that the important terms match what they expected.
A practical checklist is:
- Confirm the interest rate and APR.
- Confirm the loan amount.
- Confirm the down payment.
- Review all closing costs and fees.
- Confirm PMI or mortgage-insurance treatment.
- Review student-loan underwriting.
- Check rate-lock terms.
- Review adjustable-rate provisions, if applicable.
- Confirm reserve requirements.
- Ask about prepayment restrictions.
- Verify property eligibility.
- Clarify any remaining conditions.
If something is unclear, ask the lender to explain it before signing.
Source.. KCM Mike Ficzner Blog
The Ficzner Group is a technology-driven local real estate company that serves the Lake, Geauga & Cuyahoga County areas. Our sales team of Zillow Premier Agents use advanced search technologies that make searching the web seamless and marketing your home instant within the Zillow & Trulia Marketplace.
To connect with us directly,
Please call Mike at 440-305-6349
Or via email: REALESTATE@FICZNER.COM
Visit us at www.ficzner.com- Call or text 440-305-6349 for more information.
