• Interest The cost of interest is based on the interest rate, loan balance and loan repayment term
• Closing costs A one-time, out-of-pocket expense paid at closing, wrapped into the loan balance or wrapped into the loan in the form of a higher interest rate
• PMI The monthly fee typically paid until reaching 20% equity

The first thing you need to know about physician mortgage loans is that many lenders are willing to lower their fees, especially when they know it’s competitive. On many occasions, our clients get offered discounts once the lenders realize they’re talking to multiple lenders. If you want to get the best deal, make sure it’s clear to the lender that you’re talking with multiple competitors and it’s not a sure shot for them.

Closing costs and interest rates are kind of like a teeter totter: reducing closing costs on a mortgage increases the interest rate – Or if you want the lowest rate possible, you’ll have higher closing costs. You can see how this works in this breakdown from the Mortgage Professor website.

As for PMI, you either have it or you don’t. It’s typically going to cost between 0.3% to 1.5% of the original loan amount per year. A surefire way to avoid PMI is to put 20% down. Some loans, however, like the physician mortgage loan, do allow you to avoid PMI even though you don’t have 20% equity.

Another way to avoid PMI is to get two mortgages one that finances 80% of the deal and the second that covers the remaining debt (up to 20%). Lees verder →