Find the Right Mortgage Lender for You

Financial management is becomingmore challenging for physicians—not that it was ever easy. Physicianshave always had high educationdebt payments, office equipment expenses,and malpractice premiums. Andnow, HMOs are flattening income.

So it is not surprising that as doctorsseek financing, they are running intoresistance from the same mainstreambanks that used to extend them credit asfast as you could say MD.

Bank Loan Rejection

One New York area physician wasdenied a mortgage because his medicalpractice did not follow "normal" profitand loss patterns. "Banks shun people whocan't disclose everything and present taxreturns or W-2s to verify income," he said.

The physician heard about a directmortgage lender that specializes in self-employedprofessionals who can't verifyincome, don't necessarily have perfectcredit, need large amounts of cash, orjust need to close within a week or two.

A loan officer from the direct mortgagelender talked to the physician. Theyreviewed his application and agreed tolend him $650,000. He paid off debts andoutstanding balances, including a previousmortgage, and had $158,000 leftover to put back into his practice or touse for any purpose.

This physician was fortunate. Many ofhis colleagues were rejected or stonewalledby banks that do not understandmedical practices. Banks tend to focus onfull income check loans and pay closeattention to credit scores, which can be aproblem for physicians dependent oninsurance to keep an even cash flow.Banks generally take a long time approvingconsumer loans.

As a result, some physicians will call amortgage broker who advertises lowrates. The borrower learns, disappointingly,that brokers are intermediarieswith no ability to make lending decisionsor lend money. They are agents trying toplace loans with lenders, and the applicantmany times ends up paying highfees and rates.

Direct Lender Advantages

The mortgage company lends moneyto the borrower in their capacity as adirect lender, which differs from banksand brokers. Unlike brokers, directlenders make lending decisions and actuallymake loans. And unlike banks, directlenders are not snarled in bureaucraticprocedures. Many direct lenders specializein borrowers who are good risks butwho have unverifiable income and blemisheson their credit records. Physiciansand other professionals can find themselvesin these circumstances.

Whatever you decide, follow these tips:

• Try to work with someone referred to you by a colleague or friend.
• Beware of ads for unusually low rates—if it sounds too good to be true, it is.
• Insist on knowing closing costs in advance and getting everything in writing.
• Know how long each step takes.
• Check your lender's credentials with the Better Business Bureau and State Banking Department.

Borrowing money can be a successfulendeavor for busy physicians when theyare prudent in choosing and workingwith the right lenders. A quick and painfreeloan can help to improve your financialstanding as well as your practice. Doyour research and discover the lenderwho is suitable for you.

Michael L. Moskowitz, CPA, is president of Equity Now, a directmortgage lender. He holds a BBA degree from Bernard M. BaruchCollege. An experienced accounting and lending executive, hefounded Equity Now back in 1984. The company is licensed in New York, New Jersey, Connecticut,Pennsylvania, Massachusetts, and Florida. He welcomes questions or comments at 212-664-8900, orfor more information visit www.equitynow.com.