Mortgage Help

[Roan]

Hey Guys,

I'm currently a 4th year med student (as is my fiance) and we are about to start our residency on 07/01. I will be doing a surgery residency and we will be living in wherever it is that we end up for the next 5-7 years ( with about a 30% chance that we stay there for longer)

Our financial situation is as follows:

Combined we will make somewhere between 80-100k/yr over the next five years and after that will probably combine for anywhere from 500-800k/yr

We are currently a combined 270k in debt from school loans at around 3.5% interest. I'm currently not too worried about this as we can defer payments through residency.

We will only have 10K or so for a down payment.

My question is this: Doctors are notoriously "good loans" for banks so we have a lot of mortgages to choose from. What should I be looking for in terms of finding the mortgage that is right for us?

I assume ARMs/Interest only loans are a poor choice?

Any help would be appreciated.

[ScottieK]

Well I'm not a mortgage lender, but I have bought a house and have talked to several mortgage lenders. Rates aren't as low as they used to be a few years ago, but IMO, ARM's are a bad deal...especially now because rates are much more likely to go up than to go back down. If they go down, you can always refinance. If they go up, you're SOL. Also, interest-only loans suck because you aren't building any equity into your home. Might as well rent. Try to get a fixed-rate loan, shouldn't be that hard.

Mortgage lenders always seem to think you can spend more on a mortgage than you do. Suggest you go talk to a mortgage lender or two and see what price range you can get qualified for with a fixed-rate loan, no points, no origination fees. You can ask him to run the numbers on different prices and different maturities so you will have an idea of what your payments would be. Your terms and rate will probably be affected by how much you can put on a down payment and your credit score. Then you can take that price range and either go looking or hire a real estate agent to look for you.

If your money situation works out as you say it will, making that much more money in five years, then you should consider a mortgage with no pre-payment penalties. That way, you can pay down your mortgage faster if you want.

I'm pretty sure there are some mortgage dudes hanging around this forum, hopefully they will chime in.

ScottieK