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July 1, 2024

Understanding UMB Physician Loans

If you are a doctor looking for a way to buy a home without having to save for a huge down payment, a UMB physician loan might be the right option for you.

Dr. Home Finance here, and today I’ll guide you through everything you need to know about UMB’s physician loans, helping you understand if they are a fit for your financial needs.

What Makes UMB Physician Loans Special?

  • No Private Mortgage Insurance (PMI): One of the most significant benefits of a UMB physician loan is that you don’t have to pay for PMI, which is usually required if your down payment is less than 20% of the home’s purchase price. This can save you a substantial amount of money every month.
  • Flexible Down Payments: UMB offers different down payment options based on your status as a medical professional. For established doctors, you might not need any down payment for loans up to $1 million. However, if you are a resident, you will need to plan for a 10% down payment.
  • Generous Loan Limits: With UMB, you can borrow up to $1.5 million, which makes it possible to buy a wide range of properties, depending on your needs and financial ability.

How to Apply for a UMB Physician Loan

Step 1: Get Pre-Qualified

Start by talking to a UMB loan officer to get pre-qualified. This initial step doesn’t affect your credit score and gives you an idea of how much you might be able to borrow. This is also when you discuss the required down payment and other terms based on your professional status.

Step 2: Gather Your Documents

Once you decide to proceed, you’ll need to gather several documents to move on to the next step. These include:

  • Proof of income, such as pay stubs or an employment contract if you haven’t started your job yet.
  • Proof of savings, which shows you can cover the down payment and closing costs.
  • Documentation of your medical degree to confirm your eligibility for the physician loan program.

Step 3: Get Pre-Approved

After your documents are collected, you’ll complete a formal loan application. This involves a credit check and a detailed review of your financial documents by UMB. If everything checks out, you’ll receive a pre-approval, which outlines the amount you can borrow and the loan terms.

Step 4: Find a Home and Finalize the Loan

With a pre-approval in hand, you can start house hunting. Once you find a home and your offer is accepted, UMB will conduct an appraisal to ensure the property is worth the investment. After all conditions are met, you can close on your home, finalize the loan, and move in!

Alternatives to Consider

While UMB offers a robust physician loan program, it’s wise to compare it with other options in the market:

  • BMO Bank: Offers up to 95% financing on loans and flexible underwriting that can be particularly beneficial for fellows and residents.
  • Huntington Bank: Known for their 100% financing options and no PMI requirement, providing significant financial relief for new doctors.
  • Fulton Bank: Allows 100% financing up to certain limits and accepts contributions toward closing costs from sellers, which can reduce your upfront expenses.

The Pros and Cons of UMB Physician Loans

Pros:

  • No PMI is required, lowering monthly payments.
  • Flexible financing options cater to both residents and established doctors.
  • High loan limits up to $1.5 million, allowing for the purchase of various types of properties.

Cons:

  • Residents require a 10% down payment, which can be a significant amount depending on the property price.
  • Limited to certain medical degrees, which might exclude some healthcare professionals.

Frequently Asked Questions

  • Are UMB’s interest rates competitive?
    • While generally competitive, rates might be slightly higher than conventional loans due to the specialized nature of physician loans.
  • Who is eligible for these loans?
    • Doctors with degrees like MD, DO, DMD, DDS, OD, or PharmD are typically eligible.
  • Is it advisable to apply for a UMB physician loan?
    • Yes, if the terms fit your financial situation and goals. However, always ensure you can comfortably manage the loan payments alongside your other financial obligations.

Preparing for Homeownership with UMB Physician Loans

Owning a home is an exciting step, especially for medical professionals starting or advancing in their careers. With the tailored options of UMB Physician Loans, you are well-equipped to transition smoothly into homeownership. Here’s how you can prepare and ensure you make the most of this opportunity:

Understand Your Budget

Before deciding on the home you want to buy, it’s crucial to have a clear understanding of your budget. Consider your current and future financial obligations, including student loan payments, living expenses, and potential home maintenance costs. Ensure that the monthly mortgage payments are manageable within your budget without stressing your finances.

Improve Your Credit Score

A good credit score is essential to qualify for the best terms on your physician loan. Months before you apply, check your credit report for any inaccuracies, pay down high credit card balances, and avoid taking on new significant debts. Consistent efforts to improve your credit score can lead to substantial savings over the life of your loan due to lower interest rates.

Save for Upfront Costs

Even though UMB Physician Loans offer options with low or no down payment, you will still need funds for closing costs, which can include appraisals, title fees, and initial escrow payments. Having savings specifically set aside for these costs will prevent last-minute financial strain when it’s time to close on your home.

Choose the Right Property

When searching for a home, consider both your current needs and future possibilities. Think about factors like location, size, and type of property. A home in a good location not only provides a comfortable living environment but can also appreciate in value faster, making it a better investment in the long run.

Utilizing UMB Physician Loans Effectively

UMB Physician Loans are designed to make home buying accessible for medical professionals, but using them effectively requires understanding their nuances:

  • Leverage 0% Down Payment: For established doctors, taking advantage of the 0% down payment option can free up cash for other investments or saving goals.
  • Plan for Future Refinancing: If you start with a higher interest rate due to a lower down payment or other factors, plan to refinance in the future when your financial situation improves or if interest rates drop.
  • Consider Long-term Costs: While 100% financing can be attractive, it’s important to consider the long-term costs of taking on a large mortgage without equity, including the potential for higher interest payments over time.

Stay Informed

The mortgage world can be complex, especially with products tailored to specific professions like physician loans. Stay informed about mortgage trends, interest rate changes, and new financial products that might benefit you. Being knowledgeable can help you make timely decisions about refinancing or adjusting your loan terms.

Call to Action

Contact One of Our Verified Bankers Today!

Ready to move forward with a UMB Physician Loan? Contact our team of expert bankers specializing in loans for medical professionals. We can provide personalized guidance based on your unique financial situation and career stage. Reach out today to start your journey toward owning the perfect home for you and your family.