When You Should and Shouldn’t Be Refinancing Physician Loans
Your access to physician mortgage loans is a tremendous asset as a doctor. Not only does it help you when buying a home, but it also keeps your monthly payments as low as possible. But when interest rates on a physician loan drop, you may be interested in refinancing. Continue reading this article to learn about your refinancing options and physician loan rates.
Is Refinancing Physician Loans Possible?
Yes, just like a conventional loan, you can refinance physician loans through a mortgage lender. But just because you can refinance your physician mortgage loan doesn’t mean you always should. Some homeowners assume that when physician loan interest rates drop, they should jump at the opportunity. But depending on your specific circumstances, you may actually save more money in the long run if you stick with your current higher rate.
When Should You Consider Refinancing Physician Loans?
The biggest reason why many people refinance their loans is when lenders lower interest rates on physician loans. Over the life of a loan, interest rates go up and down. And when physician loan rates drop, the lower monthly payments may sound tempting.
Keep this rule of thumb in mind, though, when refinancing physician loans and conventional mortgages: You should wait until the rates drop at least an entire percentage point. If physician loan rates fall, but only by fractions of a percent, it may not be a cost-effective solution to lowering loan payments. That’s because there are fees associated with refinancing physician loans.
A lot of the time, refinancing costs thousands of dollars upfront. The point in time when the total money you save on monthly payments equals the amount you spent refinancing your loan is called the break-even point. Experts suggest refinancing physician loans when the break-even point is within three to five years. So if you don’t plan to stay in your current home long enough to hit the break-even point, refinancing may not be in your best interest.
Another time to consider refinancing is when you can switch from an adjustable rate to a lower fixed interest rate on physician loans. Locking in a comfortable physician loan interest rate without worrying about it rising in a couple of years can help your long-term budgeting and help you reach the break-even point in a shorter time frame.
Are Physician Loan Rates the Same as Conventional Mortgage Rates?
When it comes time for refinancing physician loans, you want to find the lower interest rate possible. In most circumstances, mortgage loans for physicians are slightly higher than those offered with conventional loans. Because you avoid private mortgage insurance (PMI) and aren’t required to put the usual amount down, if any cash at all, for purchasing a home, lenders limit their risk.
Physician loan interest rates are typically .25% to .5% higher than standard mortgage rates. While that may not seem like a significant difference at first glance, it can be the difference in tens of thousands of dollars spent over the life of a loan.
As with all loans, physician loan rates change daily. If you’re actively pursuing the idea of refinancing a physician loan, it’s critical to closely monitor rates to make sure you’re doing so at just the right time.
If you’re looking into refinancing a physician loan, reach out to Physician’s Resource Services. Our team of experts can help you with finding and securing the best loan rate for your situation.
How Does Refinancing Physician Loans Factor Into Overall Financial Planning?
A low interest rate on a physician loan increases the amount of cash you keep on hand. Early in your medical career, the more you can put towards paying down student loan debt on your primary residence, the sooner you can start building a solid personal financial footing.
Partnering with a financial planning expert that specializes in building wealth and securing the financial security of medical professionals helps make sure that you’re setting yourself up for long-term success. And when you work with a financial planner for refinancing a physician loan, they can align your new mortgage with your short- and long-term objectives.
Refinancing physician loans is just one of the many ways you can generate more cash flow for savings and investments. Among the many aspects of your finances an advisor can assist with are:
Personalized Financial Strategies
Effective wealth management is one of the best ways to experience financial success. A financial advisor works with you to understand your long-term goals and develops a plan to reach them. Using a debt management program, your advising partner can create a risk profile so you clearly understand any roadblocks and can plan accordingly.
Managing Threats and Undesired Outcomes
As a doctor, you understand sickness, injury, and accidental or unexpected death can happen anytime. The same thing can happen with a financially devastating malpractice claim. Having a trusted advisor by your side to plan for these unfortunate events can help you avoid the monetary pitfalls of them.
Are You Thinking About Refinancing a Physician Loan? Physician’s Resource Services Is Here to Help
Refinancing is about more than lowering the interest rate on a physician loan. It means having more financial freedom to invest in your future, pay off student loan debts, and set yourself up for a comfortable retirement. At Physician Resource Services, we specialize in helping residents, fellows, and practicing physicians reach their financial goals in many different ways.
Reach out to the PSR team today to schedule a consultation and begin discussing the process of refinancing physician loans or other financial strategies.
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