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.