Match Day for Medical Residents is tomorrow, and the forums at StudentDoctor.net are a flutter.
This year’s Match Day is likely to prove to be a bellwether for the Charlottesville area real estate market. UVA Residents provide cyclical stability to our market – every year they cycle in and out, providing a constant in our market. I am curious as to what this year will bring.Â Tuesday brought this email from another customer/resident with whom I have been working –
My confidence has been rattled.Â I’ve been reading too many commentaries like (this one).
This just isn’t the time for me to buy.Â I would likely need mortgage insurance to offset my low down payment, and the prospect of negative equity just sounds … plain negative!Â I’ll keep saving for the down payment for the next year, and hopefully I’ll catch the market closer to this 25% expected further devaluation.
This would be completely different if I were making 60K rather than 40K.Â I think that is the reality for a lot of people in my <40K boat.Â I think we’d also be a great target for corporate or government assistance.Â Empower me already!
I’m doubtful about the “25% expected further devaluation,” but if that’s the psychology of some of today’s buyers, that directly impacts the local real estate market.
For the past few years I have written about Match Day once or twice before at least, and this year is no different, but for one thing – the credit markets are much, much different this year (h/t VARBuzz) than in any previous year. One of the residents with whom I am working is comparing rates with the self-titled “Home of the Doctor Loan.” Stealing knowledge from a lender with whom I work frequently, Ken Mextorf of SunTrust, I learned this –
“The status of the Doctors Loan is not as bad as I was led to believe.Â Yes, they are scrutinizing exceptions more thoroughly but they are still granting them.Â There are no set in stone guidelines I can give you that are being used but some general parameters are:
– Can still go to 100% financing
– Credit scores should be above 700
– 2 months reserves after closing
– Debt to income around 50% (closely around)
Sometimes, exceptions are needed to get beyond the Debt to Income ratios which seem to be the greatest area of concern.Â The mitigating factors that help to get an exception approved on a higher DTI are:
– The ability to put money down (5%)
– Higher Credit Scores
– More Reserves after the loan is closed.”
Hmmm – buyers need cash and good credit in order to qualify? Craziness! 🙂 – and ultimately a good thing.
My advice to Residents (really to any Buyer) – work with a team of people whom you trust, prepare, know your options and move forward after performing adequate due diligence.