General Process
Financing
FAQS
General Process
Financials
For an in-depth explanation of the process of shopping for a mortgage listen to our class below.
​
This course is tailored towards physician loans, but you can use this exact process to shop for a traditional conforming conventional mortgage as well. For those who want the shortcut high-yield version of the class, read below.
​HOW TO SHOP FOR A MORTGAGE
There are two steps you can take to shop for a mortgage. Doing Step 1 helps to weed out the non-competitive products before you get under contract on a home so when you complete Step 2 it is only a matter of comparing 2-3 banks "Loan Estimates" instead of 3-10. This can be important since a loan product should be selected within 3 days of a fully executed contract to give that bank enough time to originate your loan which on average, takes about 30 days. Comparing loan estimates and getting the loan officers to get them over to you can take some time. Which is why doing step 1 can help relieve some stress for step 2.
​
STEP 1: Weed Out Phase
​
First, get a quote from one lender with the email template below. Ask them to tell you what your qualifying credit score is. and use that to ask for other quotes from different banks so you:
​
A. Don't have to fill out an application at every bank which will save you time.
B. Don't have to have your credit pulled multiple times
We have a sentence in our email template about lender-paid mortgage insurance as more of a trick question. If the loan is a true physician loan- they will say "We don't have mortgage insurance". Asking for the monthly version may reveal if they had it wrapped into the mortgage as lender-paid mortgage insurance and show you the rate difference. Most consumers don't know how to ask for this. Using this terminology will make you sound like an incredibly educated shopper, and they may respond to your email with questions and terminology you don't understand. Feel free to reach out to us if you need help answering these questions.
​​
Hello my name is _____ and I am shopping around for a mortgage for my upcoming home purchase.
​
I just got a competitive quote from another lender and I am trying to compare apples to apples to make sure I am getting the best product. Would you mind sending me a quote or fee worksheet with this information? Make sure you include what the total estimated out of pocket cost or "cash to close" in your estimate.
​
-
A rate at 7% (Whatever the rate the first bank quoted you for)
-
Estimated Purchase price of home
-
Estimated Down Payment
-
Pier Diem Interest at 15 days
-
Taxes est $500 a month with 6-month escrow collection
-
Home insurance at $200 a month with 15-month escrow
-
Credit score of XXX
-
No seller paid closing costs.
​
If you have a monthly mortgage insurance option instead of the lender-paid option where it is wrapped into the rate, I would be interested in seeing that broken down as well. Thank you for your time and I hope we can work together.
​
In our experience with those who have done this- most physician lenders know what you are up to and won't give you exact numbers. They usually respond saying "our fee is a flat rate fee of ~$1000 and the rest of the costs are the same as any other company."​
​
This is mostly true, but not 100% true. Even if their origination fee is only $1000, their processing fee's may be more, or their appraisal system may charge more, or the underwriting fee may be more. These other fees usually are within a couple hundred dollars of each other, but it can add up to make a difference. Part 2 of the shopping process is going to be where you see all these costs broken down in detail.
For the process of weeding out banks, these general numbers are usually enough to get a ballpark of banks with best overall cost/rate ratio, especially the ones providing higher origination fees. The banks charging higher origination cover this fee typically by wrapping it into the rate, which is why their quotes will come back with higher cash to close- or a much higher rate than banks who charge a lower origination fee. So a bank that comes back and says "we have a $1000 origination fee and our rate is 8%, and another bank says "we have a $1000 origination fee and our rate is 7.25%" What that really means is the first bank has a higher origination fee, but it was wrapped into the rate, or they have mortgage insurance wrapped in there. This is different than paying mortgage "points", which is when you decide to pay more in loan closing costs to "buy down" your interest rate.
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​​​​​​​​​​​​If you are considering going with one bank (lender) over another- you absolutely can give each of the banks a chance to beat or match another's rate. This is more important in the non-physician loan world and has saved some of my clients thousands in closing costs and hundreds on their monthly payments. Most TRUE physician loans are such an incredible deal as is that if you try to shop them too much they just say "good luck finding something better". ​
You could honestly completely skip step 1 if you are crunched for time. The most important part of the shopping process is once you get under contract on a home and compare the "Loan Estimates" of each bank.
​
​
STEP 2: Comparing Loan Estimates
This is the most important part of the loan shopping process. A loan estimate is a three-page document that provides details about a mortgage loan, including the estimated interest rate, monthly payment, and closing costs. Lenders are required to provide a loan estimate within three business days of receiving a mortgage application. Now the reason a lender can wait to provide you with a Loan Estimate until you are under contract on a home is because a loan "application" in government terms includes these elements:​
​
-
Your name
-
Your Social Security number
-
Your income
-
Your credit history
-
Your assets and liabilities
-
The address of the property you want to buy
-
An estimate of the property's value
-
The loan amount you want to borrow
​
Most lenders will just put TBD on the property address in your loan application until you are under contract on a home to avoid sending out a Loan Estimate. Once you send them a copy of a fully executed Real Estate Purchase contract is the point of no return for loan officers, where they are legally required to get you a loan estimate within 3 business days.
​
This loan estimate makes is very easy to compare banks rates and charges. It is a standardized form all banks have to use. Kait was a mortgage loan officer in 2015 when all the "TRID" changes came down from the CFBP to make it more transparent to shop for a mortgage. Many loan officers were terrified their companies would be exposed and forced to charge lower originations because of this transparency, and many did have to change to compete.
​
Page 2 is where we will spend most of our focus on
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​​​
​Page 2 looks something like this. The most important part of the loan estimate is sections A and B. These are the costs that are specific to the bank. They have a "zero tolerance" regulation, meaning that once this number is disclosed to you, it is not allowed to increase later on in the process. So a loan officer can't bait and switch you. It can increase if you decide to increase your loan amount (in the case you decide to put less money down, etc.) That is called a "change of circumstance" and then the lender will be required to send you a new loan estimate if that happens.
​
The rest of the sections will be the same cost no matter what bank you choose to work with, so for the ease of comparing you can just ignore them. UNLESS a lender states they will give you a special credit to help bring the costs down- then you want to make sure you see that reflected in section J.
​
THIS IS IMPORTANT: As soon as a loan estimate is sent out, banks are going to pressure you to LOCK LOCK LOCK your rate as soon as possible. They will make it seem like you have 5 minutes to decide, that it will be doomsday if you don't make a decision NOW, that rates will skyrocket to 1% more in the next hour.
They do this because they KNOW the longer you wait to lock in a loan with them, the more time you have to collect other loan estimates and compare. Locking in a loan with a lender is a quality metric they track, and once you have locked a loan with a lender, your rate of retention as their client skyrockets.
Rates typically only change daily, sometimes they will change up or down 1-2 more times in a day, but no one knows when that will happen, or if the change will be better or worse for you financially. So don't get bullied into locking in a rate. Take your time, shop around, compare, and try to get a bank to rate match if you like a loan officer's service better than another. Usually, you want to decide within 48 hours just because you want to ensure you give the lender enough time to originate your loan for your home purchase contract deadlines, but it is not a "do or die" within hours of them sending it to you.
​
When you add up the cost of section A+B, and subtract any lender credits in Section J, this will give you the "total origination fee" with all the costs of the bank added up. If you ask to have all the banks give you a quote for the exact same rate (to give you a common denominator) the bank with the lowest "total origination fee" should be the best bank to work with. Then once you pick a bank, you can ask them to give you different loan estimates for different rates within the bank and decide which one is best for your situation.
​
Sometimes when you ask a bank to quote you a specific rate, they will say they can't do that rate for you, which makes it difficult to get the common denominator. Then you will just do your best to compare the total origination fee from the loan estimates from different banks. If one bank is charging a 7.25% rate with a $3000 total origination, and another is 7% but they are charging $3500, it is still pretty clear to see which has the better fees overall. For context, it usually costs thousands in rate buydown fees for every 0.125% of an interest rate point you "buy down".​​​​​​​
​
If you complete this process and still need help. Feel free to contact us. We will not tell you which bank to go with. but if you need help with the numbers, we can give you the data and you can make the decision from there.
​
WHERE CAN I FIND PHYSICIAN LOAN PRODUCTS TO SHOP AROUND TO?
​
One thing we have learned over the years is that the product and quality of your experience with a bank varies greatly from loan officer to loan officer, even if they work for the same bank.
​
We had a client once that decided they wanted to get a head start on getting a physician loan. They had heard somewhere a specific bank did physician loans, so they walked into the local branch and did a general application with a loan officer. When they finally connected with us we asked if they had been prequalified anywhere. They said yes- with Bank XXX. we said "great" are you working with XXX loan officer? They told us no. We did not think this would be an issue until we started shopping around and noticed that this company's physician loan rate, which typically won with most my other clients, was not even coming close to competing. I reached out to the "physician loan guy" at that bank that I typically used and asked why this other loan officer at his same company had a rate that was not as good as his.
He said that because he did so much volume for the company they gave his clients a better deal than the general market as a marketing incentive for his team.
When she found out the product was not the same, the bank would not let her transfer her application to the "Physician Loan Guy" and take away a lead from that original loan officer. Luckily through our shopping process we were able to get another physician loan bank to match the rate she could have got with the "physician loan guy" and went with a different bank completely. So we were able to make it work out in the end.
​
You can find Physician Loan Lenders on the White Coat Investor Website. But keep in mind they pay thousands in marketing a year to be named on that page- so take those recommendations with a grain of salt. We can tell you right now half of the physician loan products offered on that page are not true physician loans and wrap in mortgage insurance in the rate. If someone shops and compares it becomes clear which ones are, and are not true physicians loans, because the overall rate and cost at some banks are much lower than others.
We can also tell you some loan officers listed on that page are top quality that we recommend our clients to, while others have provided horrible experiences for our clients. We always recommend shopping at least 3 loan products and try to work with a loan officer you can get a personal real-life recommendation from. If you work with someone and cannot talk to someone who has recently worked with that person, (Including us- feel free to message us) proceed at your own risk. If you want to work with companies we have personally, shopped, vetted, and have real-life experience with -Meaning we know at least 2 people (either personal clients or friends) who have done a loan with that specific loan officer, click HERE.
​
