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Author Archives: LarsonFinancial

Three Reasons to Consider a Physician Loan for Your Home

For a newly practicing physician, or even a resident or fellow training in an area with lower housing costs, a physician loan can be a great way to purchase a home. Here are our top three reasons a physician loan may be the home financing solution for you.

  • Low or no down payment. The amount of the down payment will depend on the purchase price, home type and location. In many parts of the country, it is possible to find zero down on a home up to $750k, while in other areas, 5-10% may be the minimum.
  • No mortgage insurance. Often referred to as “PMI,” this insurance is required for lenders who purchase a home with less than 20% down. Physician loans are specialized products, privately financed and are not required to charge PMI, an added cost that is not deductible to high-income earners under current tax law.
  • Debt-to-income ratio. Physicians often carry large student loan balances, which can be even more burdensome for a couple who both carry these loans. Physician loan products do not consider student loans when calculating debt-to-income ratio, a key determinant in the approval process.

There are many factors in determining whether to opt for a physician loan versus conventional financing, even when the 20% down payment is available. It’s important to speak with various lenders to find the product that best suits your needs, however, because lenders in the same city may offer very different terms.

Talk with a trusted advisor about the pros and cons as it relates to your situation but be very cautious about one key factor: Banks like physicians and will often lend a doctor more money than they can afford to pay. Your advisor can discuss this with you as well.

Is a physician loan right for you? We can help you decide.

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.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates. This article is not intended to be a solicitation for an extension of credit for a loan.

Three Things You Didn’t Know About Taking a Vacation

When was the last time you took a good vacation? Has it been months? Years? A decade or more? You wouldn’t be alone.

According to an article from Medscape, over a third of family physicians and almost as many emergency medicine physicians, internists and general surgeons take off two weeks per year at most.

Planning time away from your practice and daily grind are key to preventing burnout. A study conducted in 2010 found some interesting things about vacationing. Here are a few things you may not have known about taking a vacation.

  • Anticipating a vacation can be as rewarding as actually taking a vacation. Vacationers are generally happier than non-vacationers, but post-vacation happiness was similar among both groups. That could mean that planning and then looking forward to a vacation may be more beneficial to your stress levels than the vacation itself.
  • Quantity over quality. Given that post-vacation happiness levels are similar between vacationers and non-vacationers, the length of the trip you take may matter less than you think. Consider taking a handful of shorter vacations throughout the year as opposed to one or two long vacations to maximize the “pre-trip happiness.”
  • You may not be relaxed unless you’re truly relaxed. Vacations generally don’t add much to your happiness, post-trip. Only those who take “very relaxed” holiday trips benefit most in terms of post-trip happiness. When you decide to take your vacation, truly leave work at work. To gain the maximum benefit, focus on the vacation and getting the most enjoyment and relaxation out of your activities before you return to work.

As a doctor, it can be tough to schedule time away. You’re busy, you have patients to see and you may have a practice to run.

To remain happy in your career and prevent burnout that can be very common among doctors, make it a priority to take some time out for yourself and your family throughout the year. You’ll thank yourself down the road.

Are you inspired to plan your next vacation? Our financial advisors can help you fit it in the budget.

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.
On occasion, our firm will share third party links or articles. By clicking on any link or article, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements or representations whatsoever by us regarding third-party Websites. We are not responsible for the content, availability or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products or services available on or through them. The opinions expressed by featured authors are their own and may not accurately reflect those of Larson Financial Group. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

What is Business Overhead Expense Disability Insurance?

The disability insurance you may have individually can take care of your basic needs, such as your student loan payment and mortgage, but what happens if you own your own practice and become disabled? Your individual policy likely won’t include funds for hiring someone to replace you. That’s where business overhead expense insurance comes in.

Business overhead expense insurance is a disability policy that can be customized to suit your needs. This policy lets you set aside an amount of money to cover a period of time, no longer than two years, intended to cover a period of time needed to either hire a new doctor for your practice or to heal and come back to work.

Some things to look for in business overhead expense insurance is the amount of coverage, whether you can pay for the salary of another doctor, and the termination period for when the policy will begin paying out.

The amount of coverage is self-explanatory: you choose an amount anywhere from $10,000 per month to $30,000 per month. Choose an amount that can cover your needs.

Hiring another doctor is a piece of the policy you need to be sure is included before you buy it. Many policies will include terms to cover costs of running the practice, like your staff, your rent and all other basic expenses but won’t cover costs of hiring new staff. Be careful that the contract states you can use the funds to pay the salary of another doctor.

The termination period is important because if you choose a period that’s too long, like 60 or 90 days, you may run out of income before that date hits, leaving you in a bad situation. Many doctors who own a practice will have accounts receivable coming in for a period of time from past cases, and you need to ensure your business overhead expense insurance will overlap with that money, rather than leaving yourself with a gap.

With these types of policies, you’ll want to make sure there isn’t a significant drop on money coming into the practice, which is why this type of coverage is so important to those who run their own practice.

Do you need to re-evaluate your disability policy to include business overhead expense insurance?

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.

Three Reasons to Consider an HSA

Health Savings Accounts (HSAs) have become increasingly popular in workplace benefit plans in recent years. At the core, an HSA allows you to put money away in an account tax free to use for medical expenses, included prescriptions, office visits and procedures. But an HSA is a lot more than just a medical expense account.

In 2019, an individual with a qualified high deductible health plan can deposit $3,500 into their HSA; an individual with family coverage can deposit up to $7,000. In 2020, however, these amounts will increase slightly to $3,550 individual/$7,100 family, according to the IRS. With the new caps, there’s no better time to contribute to your HSA. Here’s what we mean:

  • Payroll deductions mean contributions are usually pre-tax. If the funds are pre-tax, they’re not included in your gross income and are exempt from federal income taxes; even still, the contributions in some states aren’t subject to state taxes either. If you make contributions with after-tax dollars, you can deduct them on your income taxes.
  • Withdrawals for qualified expenses are tax-free. When you take contributions out for qualified medical expenses, that money isn’t subject to federal (or state, in some cases) taxes. Any earnings or interest in the account also grows tax-free.
  • You get to keep the money year after year, and even if you switch employers or plans. The funds in your HSA are yours to keep, whether you quit your job, move to a different healthcare benefit plan or if you don’t use it that year.

There are a few drawbacks to HSAs, however. Most HSAs are part of a high-deductible health plan, which can result in higher out-of-pocket costs to the patient for care. You’re also subject to taxes and penalties if you use the funds for nonmedical expenses before age 65.

An HSA can be an attractive option for many people. It’s best to talk through the advantages and disadvantages with your financial advisor to see if an HSA is the right call for your situation.

Is an HSA the right solution for you? We can help you decide.

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.

Sell or Rent? Making the Most of Your Prior Home

If you’ve made the call to move—whether you’re upgrading, downsizing or simply looking for a change—you need to do something with your previous home. But what do you do? Sell it? Rent it as an income property? Keep it as a second home? In this article, I’m going to try to give you answers to some common questions that may come up when it’s time to move.

  • I’m planning to move to a different area. Should I sell my home or rent it?
    • Generally speaking, I recommend you sell unless doing so would cause you to take a significant loss that could be mitigated by holding the property for a period of time or you want to be a landlord and own a home in an area where you do not live. Real estate is a great investment; however, there are other ways to own real estate that alleviate you of the responsibility of day-to-day management.
  • What are some unique challenges that can accompany renting vs. selling a property?
    • Being a landlord is not for everyone. There are various challenges, including advertising for tenants, handling leases and deposits (In some states interest must be paid on a rental deposit) and the big one, especially if you live far from the property; maintenance. It is advisable to hire a property management firm if the owner does not want to handle these responsibilities; however, it comes at a cost. Another potential negative to renting your property; the tenants are unlikely to treat your former home with the same care you would.
  • Why would renting be advantageous?
    • If you own a property in an area with significant appreciation, renting your property can generate a significant gain long-term. And even in areas where appreciation isn’t significant, if you can generate enough rental income to cover you costs, someone else is paying off your asset for you.

Finally, do not be afraid to take a loss on a property to get out from underneath a mortgage, especially if you do not want to be a landlord or if holding the property as a rental makes it difficult or impossible to obtain a mortgage on a property where you are living next.

The debt on the rental property impacts your debt-to-income ratio, a factor in obtaining a mortgage and banks in general do not consider the rental income in total or at all in their calculation of your ability to pay both mortgages.

It is important to remember that three months—or worse, a year—without a tenant can dramatically increase your monthly expenses and impact your own financial independence goals.

Any plans to move? Are you considering an income property? We can talk through it together and determine how best to put your previous home to use.

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.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.
Not all Related Services are offered directly from Larson Financial Group, LLC or Larson Financial Securities, LLC but may be available through the Doctors Only network of companies.