Physician Mortgage Loans Versus FHA Loan

One of the newest types of home equity loans is physician mortgage loans. These loans have received a lot of attention lately because of their potential to be very lucrative. If you have a medical practice or you know someone who does, you should consider this loan option. What is so attractive about these physician mortgage loans is that they are not only based on your personal medical expenses, but also on the success or failure of your practice. If your practice is making money, then you can borrow the money to expand it. If it is not doing so well, then you can borrow against the equity of your home to increase your capital and relieve some of your financial obligations.

Unfortunately, many of the long-standing physician mortgage loans that were previously available through traditional banks are no longer available or not available through traditional lenders. Instead, there are now a number of lenders that exclusively offer physician mortgage loans to physicians. While the new competition has resulted in a few quality lenders, it has also resulted in some predatory lenders looking to take advantage of the relatively new market. Unfortunately, these lenders often charge very high interest rates, demand expensive credit checks, or even charge fees for loan processing. As a result, many physicians either pay the higher lender's fees, or choose not to apply to the loan at all. In many cases, the result is that these lenders do not make the loans available to the physician at all.

The good news is that there are new sources of physician mortgage loans available to the qualified borrower. Two new options have emerged recently that provide loans at reasonable interest rates and with much more flexible terms than were available previously. First, there are now two main types of lenders willing to finance this type of home equity loan. The two primary types of lenders are direct lenders and online lenders. Each of these has advantages and disadvantages that should be carefully considered by the qualified applicant.

Direct lenders will typically work directly with medical professionals to obtain the financing they need. These lenders typically will require the physician to have an active Medicare/ Medicaid account, as well as to have at least five years of experience in a similar specialty area. In addition, these direct lenders will require the physician to have either a direct deposit account or a bank account in order to process payments on the physician mortgage loans. Because these lenders control the investment, they typically exercise more caution when evaluating the application process and ultimately approve more quickly than traditional lenders.

Online lenders, on the other hand, will typically work with physicians that have an FHA loan, as most of these doctors are FHA holders. However, instead of working with the physician directly, online mortgage insurance loan companies will use a third party processor to collect the application information from the doctor and transfer it to their lender for approval. Once the physician has been approved for physician mortgage loans, the online loan company will then process the loan and submit it to the appropriate national authority.

Because there is no face-to-face contact between the physician and the loan company at any time during the loan process, processing may take a few extra days. While this extra time can add up to a higher interest rate, the payment period will typically be much longer, which can save the borrower several thousand dollars. Because many health plans have a 30-day payment period, most health professionals can complete their loan settlement in less than a week. If the loan amount is not repaid within the agreed period of time, the physician may be subject to financial penalties. Although the penalties for late repayment are not as severe as those for a traditional loan, doctors should still be cautious and repay their loan as promptly as possible.