Dentists can have complex financial situations that makes major purchases like buying a home more difficult. In order to avoid extra complexity, make sure to follow these 6 steps as your home purchasing journey begins.
Navigating a purchase of a new home can be tricky, especially for dentists, make sure you're maximizing your offer before you go and sign on the dotted line.
Dentists, more than just about any other highly educated profession, have complex financial situations that many mortgage underwriters do not understand or are not likely to take a risk on approving. Many have high student loan indebtedness. They may be moving to a new position, relocating to another state, working as a 1099 independent contractor, or be self-employed. These are the factors that are most likely to coincide with difficulties obtaining mortgage financing.
Imagine receiving this type of email from your mortgage lender the week or day before closing, “I’m very sorry, underwriting has decided to decline your loan application due to...” While incredibly frustrating and disturbing to you and your family, in almost every instance this outcome can and should be avoided. By following the six steps below, you increase the likelihood of a flawless new home purchase experience.
Selecting your lender based on interest rate alone can be a disastrous mistake. The reality is, the bank advertising the lowest rate may have the lowest quality systems and processes and may be paying their employees the least, therefore attracting low end talent. As a result, you may receive the lowest level of care.
While rates and fees are one factor to consider, it is equally important for you to select a mortgage professional who understands your unique situation and selects a loan for you that will ultimately be approved by the underwriter. Getting quoted a blockbuster rate—only to get declined by the mortgage underwriter later—isn’t going to do you and your family any good.
Ultimately the two best ways to source a professional lender who is experienced with dentists and other medical professionals is either via a personal referral, or if not available, by Google searching “dentist home loans and your state.”
Once you think you have located a lender with experience financing dentists, take the time to review the firm’s reputation. This has never been easier with all the customer review sites available today. Reading online reviews from Google, Facebook, Zillow, Angie’s List, etc., will help you quickly to determine if they are a fraud or are legitimately focused on serving dentists and other medical professionals.
Even if you are satisfied with what you find online, you might go a step further and ask for past clients with whom they have worked. Get contact information and reach out to find out how the experience was for them.
Ultimately you are searching for a lender who has a program specific to dentists. That type of lender will more likely have sufficient experience to recognize where the landmines are and safely guide you and your family through the home buying experience without significant stress, time, and surprises.
One of the biggest mistakes that dentists make when searching for financing is assuming, they are going to qualify and therefore don’t want to go through a thorough pre-approval process. This is not the time to cut corners. It is the time to bring up anything that could possibly become a problem down the road. Then discuss potential concerns with your loan officer up front to ensure you are not disappointed later.
Remember, the mortgage underwriter—not the loan officer—has the final word in approving or denying your loan. With that in mind, it makes sense to ask for the underwriter to review your situation before you make an offer on a new home. Insist on a full credit and income approval, which consists of a thorough review of all income, assets, credit, liabilities, and documentation of any other factors that might impact your underwriting approval.
Most banks do not offer a full underwriting review of your documentation until you have identified a home you want to purchase. That’s because of the cost they incur for having an underwriter review your documentation. Yet, this step is too important not to be adamant about requiring the credit and income approval by an underwriter not just the loan officer.
The fact is, loan officers are paid to find business, offer advice, and help clients through the loan process. Underwriters are the gate keepers, the quality control mechanism for banks. Ultimately, the underwriter is the one who will approve your loan and is the person you want to ask to review your documentation up front.
Quality and expertise amongst Realtors® vary greatly, so does their ability to give you trustworthy advice and negotiate a winning offer on your new home. Too many buyers waste months, even years, searching for a new home because their Realtor® didn’t have adequate knowledge, was a poor negotiator, or didn’t know how to truly advise their clients.
Conversely, skilled Realtors® make the process pleasurable—especially those who specialize in and have a stellar reputation working with dentists and other medical professionals. They locate the perfect home, negotiate their client’s offer successfully and secure the home for their clients against multiple simultaneous offers on the property.
This step becomes even more crucial if you are relocating to a new state or community that you are not familiar with, or in which you are not yet living. In this case, your Realtor® will also act as your eyes and ears as the appraiser, home inspector, as other property related due diligence occurs. Most dentist focused loan officers will also have a list of great Realtors® for you to interview.
Open up the lines of communication between your loan officer and Realtor® early in the transaction. This requires them to have discussed your thorough credit and income approval as well as how long it will take you to get from writing an offer to closing. Your success depends upon these two professionals working together.
Once you have completed the full credit and income approval process, most loans should be able to close in under thirty days. This is important for your Realtor® to know and also to present to the seller of the home on which you are making an offer, which will make your offer stand out in the case there are multiple offers on your home.
Outline your communications guidelines as well. Once you go under contract to purchase your new home, ask for weekly email updates from your Realtor® and loan officer. Loop everyone together to make sure you are on track with your due diligence deadlines and to confirm everyone is on the same page regarding the timing and location for closing.
Included in your real estate purchase contract will be due diligence deadlines that you must complete by specific dates. Set up calendar reminders for specific deadlines listed in your purchase agreement. It’s important. If you fail to complete that due diligence by the agreed upon date and you later find something wrong, your earnest money is at risk and might be forfeited to the seller.
Most states will have a physical inspection of the property deadline, a financing approval deadline, and an appraisal deadline (also called contingencies in some states). Your Realtor® and loan officer should be watching these dates to make sure all due diligence is completed prior to the agreed upon dates. If it looks like something is amiss, make sure your Realtor® negotiates an extension on the deadline if you need more time.
If you are searching for a home in today’s highly competitive real estate market, following these six steps will give you the highest possible chance for success. Dentists have more moving pieces and pose a more complicated financial picture to mortgage underwriters than do most professionals. By aligning yourself with professionals who are experienced working with dentists and attuned to the unique challenges you may face, it will more likely facilitate a flawless home purchase that results in success for you and your family.
For more personal finance insight, read on here!
About the Author:
Josh Mettle NMLS #219996 is an industry leading author and ranked top one percent of all mortgage originators in 2018 by Mortgage Executive Magazine, specializing in financing physicians, dentists, CRNA, and other professionals with highly specialized professional loan programs. Based in Salt Lake City, Utah, Josh is area manager for Fairway Independent Mortgage Corporation. Email: firstname.lastname@example.org.