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Are you considering homeownership? As a doctor, you may face barriers to purchasing a home including high student loan debt and delayed buying due to extended years in training.
As a busy healthcare professional, you likely have limited time to search for the right home and the right lender. Asking the right questions of your lender can help you secure a mortgage that aligns with your needs and goals. We’re here to help make finding your lender a little easier with 10 questions you should ask lenders.
1. What types of mortgages do you offer?
There are three main mortgage types, plus doctors may qualify for doctor loans (or physician loans) that have unique benefits to support the unique needs of doctors. A mortgage lender can explain the pros and cons of each loan type in relation to your financial situation and lending needs.
Here is a brief breakdown of each type:
- Conventional mortgages are the most common type of home loan, but they often come with stricter requirements for credit scores and debt-to-income (DTI) ratios.
- Government-backed loans, such as FHA, USDA, and VA loans, are insured by government agencies. These loans typically have more flexible qualification criteria, allowing for lower credit scores and higher DTI limits, making them a great option for those who may not qualify for a conventional loan.
- Jumbo loans are designed for purchasing high-value properties and are more challenging to qualify for compared to other mortgage types.
- Doctor loans, specifically tailored for physicians, dentists, and veterinarians, offer advantages like lower down payments. These loans can help doctors buy a home earlier in their careers.
Learn more about mortgage basics »
2. What will my interest rate and APR be?
Ask your mortgage lender your interest rate and annual percentage rate (APR), which is the interest rates plus fees and other costs. A lower interest rate may seem appealing, but the APR will give you a clearer picture of the overall cost of the loan.
Your interest rate is determined by many factors, including your credit score, income, and down payment plus market factors like inflation.
Find tips for improving your credit score »
3. Do you offer preapproval or prequalification? How much can I afford to borrow?
Ask your lender to prequalify or preapprove your loan based on your creditworthiness and financial capacity. A lender will review information like income, assets, debts, employment, credit score, and more to assess your ability to repay the mortgage loan.
Prequalification or preapproval can help you determine your budget and identify any issues that may impact your mortgage eligibility.
Learn more about prequalification and how to prepare for it »
4. What will my monthly payment and fees be?
As you search for your dream home, you should know what your monthly payment would be at different home price points. Your monthly payment includes the principal, interest, property taxes, and homeowner’s insurance. If you are making a small down payment, private mortgage insurance may also be included.
A mortgage lender can explain each of these costs and provide sample monthly payment calculations to illustrate how much you would pay in various scenarios. Once you find the home you plan to purchase, your lender can provide a full breakdown of your monthly payment to avoid any surprises.
5. What are your credit requirements?
Credit requirements can significantly impact your eligibility, interest rate, and loan terms. Credit score requirements differ based on loan type:
- Jumbo and specialized mortgages, like doctor loans, often have the highest credit score requirements (typically 700 or higher).
- Conventional loans have a lower credit score requirement (typically at least 620).
- Government-backed loans may accept scores as low as 500 with a high down payment.
Ask your lender how your credit score and other factors will affect your interest rate. Knowing these details can help you better prepare and improve your chance of securing favorable loan terms.
Find tips for improving your credit score »
6. Is there a prepayment penalty?
Some lenders charge a prepayment penalty if you pay off your mortgage early, either by refinancing, selling your home, or making extra payments to reduce your principal balance faster. Ask if this applies to your loan. If you plan or hope to pay off your home loan early, ensure you won’t be hit with a prepayment penalty.
7. How long will the loan process take?
Conventional mortgages close in an average of 48 days, but more complex mortgages can take longer. The timeline for approval and closing can vary depending on the lender and your financial situation.
Ask what steps could cause delays, such as appraisals, document reviews, or additional verification. A clear understanding of the timeline allows you to plan ahead and coordinate other aspects of your homebuying journey.
8. Can I lock in my interest rate?
Interest rates fluctuate, and locking in your rate can provide stability while you finalize your home purchase. A rate lock secures your interest rate for a specific period, regardless of changes in the market.
Some lenders offer free rate locks, while others charge a fee. Some lenders offer a “float-down” option, which allows you to take advantage of lower rates if they drop before closing. Especially in times of a fluctuating market, knowing rate lock options can help you get the best rate on your mortgage.
9. What down payment is required?
The amount of down payment required can vary by loan type. Conventional mortgages typically require at least 3% of the home’s purchase price, while doctor mortgages may not require a down payment at all.
A larger down payment can lower your monthly payment, reduce your interest rate, and eliminate the need for private mortgage insurance. Ask your lender if they have specific down payment requirements based on your financial situation or the type of loan you are pursuing.
You may also want to ask about down payment assistance programs. Understanding these requirements means you can ensure you are financially prepared for your purchase.
10. What are the closing costs?
Closing costs cover fees for appraisals, title insurance, and underwriting and typically range from 2-5% of the loan amount. Your lender can provide an estimate of these costs and whether any of the closing costs are negotiable or can be covered by the lender or seller.
Working With A Mortgage Lender
As you approach homeownership, asking the right questions can help ensure you fully understand your mortgage and set you up for financial success in homeownership. Use these questions to guide your search for the right lender for your needs.
If buying a home is in your future, working with a mortgage lender who understands the unique lifestyle and financial circumstances of doctors can make the process a little simpler. That’s why we’ve partnered with Primis Mortgage, to give you the service you deserve. Lock in low rates as you purchase or refinance your home here.
The information and advertised terms, including interest rates, are from Primis Mortgage Company (www.nmlsconsumeraccess.org NMLS# 1894879; Equal Housing Lender). Mortgage applications can only be submitted in those states that Primis Mortgage is approved to lend. Panacea Financial is not a mortgage lender in any transaction and does not make mortgage loans, mortgage loan commitments or lock-rates related to mortgage loans. All credit decisions for mortgage loans, including loan approval and the conditional rates and terms offered, are the responsibility of Primis Mortgage Company and will vary based upon the loan requested, the borrower’s financial situation, and criteria determined by Primis Mortgage Company. Not all consumers will qualify for the advertised rates and terms. All information provided is subject to verification. Other terms and conditions may apply. Panacea Financial does not guarantee that Primis Mortgage Company will make you a conditional loan offer and nothing herein or on this website is considered a commitment to lend. Panacea Financial is a division of Primis Bank and Primis Mortgage Company is a subsidiary of Primis Bank.
