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Monthly Archives: February 2019

Think Twice Before You Borrow the Maximum

As you weigh your options in buying a new home, you’ve got many factors to consider. Cost of the home, monthly mortgage payment, moving costs, etc. You may even get pre-approved from your lender for quite a bit of money, especially as a doctor. Be careful, though, because it may not be a good idea to borrow that full amount.

Especially for doctors looking to buy their first home, a good ballpark for your first mortgage is to keep it within 2-3 times of your annual income. That may not always be possible, especially in more metropolitan areas where home prices have gone up. In those situations, it may be a good idea to consider other options such as buying a condo or renting for a period.

If you’ve got an idea of the price range of a home, you’ll need to find a mortgage specialist to help you along. Many lenders offer something called physician loans. These kinds of products typically offer low or no down payments with no mortgage insurance. For a physician without enough cash on hand for a large down payment, this could be a good choice; keep in mind, however, that interest rates and lending guidelines can vary among lenders.

Some lenders will also try to offer a higher mortgage than you may be able to afford. Talk with your financial advisor about the various loan and mortgage products available to you. Doing so can help you decide how much house makes sense for you, given your other commitments or priorities.

You may feel the desire to use that full approval amount for your home. After all, living lean during medical school can make you eager to push that new higher income to the limit. During the decision-making process for a home, which is both emotional and financial, you can lean heavily on your financial advisor. They can help to ground you and give you perspective on the various familial, societal or other pressures you’re under to live large.

A final thought to keep in mind: buying a home is more than just the mortgage payment. There are upkeep costs, renovations if applicable, furniture, décor and more. These expenses can quickly add up based on the size of your home and your tastes. Remember, you can upgrade as you go along. Owning a home is a big step. Pace yourself!

Are you considering buying a new home? Let’s talk it over together.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.

Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.

Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.

A Disability Doesn’t Have to End Your Career

Disability insurance exists to protect our income, should we suffer a debilitating injury or illness. But for doctors, standard disability insurance usually fails to meet our needs. Disability insurance is a good tool to have for any professional, but doctors have a few particular needs.

Firstly, we invest significant time and money into our education and training prior to starting in practice. We expect this investment to result in an above-average income, especially considering the 10+ year delay in saving for retirement, a home or paying down student loan debt. We need that income to reach our financial goals.

Second, many specialties require the use of your hands—typically for surgeries, which often require fine motor skills. In many other professions, accommodations can be made to allow someone to continue working. For doctors, it’s impractical or even impossible to continue performing surgeries or other procedures if you become disabled.

Your employer may offer group disability, but this tends to be inferior to individual policies you can find in the marketplace. These policies can include things like timeframes on your coverage, after which it can be difficult to meet the definition of a disability unless you’re incapacitated or even near death.

Be sure to work with a financial professional who represents your interests, rather than that of a particular company or singular policy. Review various options available to you and learn about some of the additional features, such as riders that continue to make retirement plan contributions or pay student loans.

When you’re shopping, you may want to consider some of these traits in your search:

  • “True” Own Occupation Coverage will protect you in your specialty even if you’re able to work in a different capacity, such as teaching in a medical school.
  • Residual disability riders are supplemental tools that start to pay benefits in the event of a gradually debilitating illness and continue to pay benefits after you’re able to return to work as you build your practice back up to pre-disability earnings.
  • Non-Cancellable and Guaranteed Renewable typically refer to guaranteed coverage so long as you make your premium payments. You also won’t lose coverage after experiencing a disability and returning to work.
  • Future Purchase Option riders allow you to purchase additional coverage without providing proof of good health, taking into account only the financial requirements of the increased coverage instead.

Whatever your policy choice, shop around and involve your financial professional. Choosing the wrong disability coverage could be disastrous for the substantial investment you’ve made in your career.

Is your disability coverage protecting you, or is it time for a change?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.

Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.

Insurance services offered through Larson Financial Group, LLC, an insurance agency.