What is a physician mortgage? How does it compare to a conventional mortgage? Why is it important to work with a mortgage lender that you trust and that also knows his or her stuff?
In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks to Richard Ricci, a loan officer from Truist (formerly SunTrust Mortgage). Richard graduated with a business degree from the University of Florida and has made mortgage lending and quality of service his passion. Richard specializes in Truist’s industry leading Doctor Loan program. However, he is an expert in all types of mortgage loans, including conventional, VA, FHA, Jumbo, and new construction.
Topics Discussed:
- UPDATE as of Jan 28th, 2021, Truist is currently back to their previous guideline of a max of 100% financing
- Basics of Physician Mortgages:
- How qualification works
- How credit scores play into loan requirements
- Best practices when shopping for lenders and comparing rates
- Differences between physician mortgages and conventional loans
- What’s with mortgage rates? Lowest they’ve ever been—keep getting lower
- Physician Loan Benefits: Lower down payment with no PMI
- Debt-to-Income Ratio: Determines maximum loan amounts
- Credit Scores: Depends on lender, but higher credit score, better interest rate
- All that matters? Don’t be misled by lenders’ interest rates and closing costs
- Compare and Consider: APR and lender fees on good faith/loan estimate
- 15- vs. 30-Year Loan Options: Go with 30-year fixed rate, just in case
- Denied?! Gatekeeper cares, limits stress, and knows physician loan guidelines
Links:
Richard Ricci – Truist Physician and Jumbo Loan Specialist (NMLSR #659699)
Richard Ricci’s Phone: 855.501.6730
Richard Ricci’s Cell: 904.994.0847
The Complete Guide To Physician Mortgage Loans (blog post by Daniel Wrenne)
Transcript:
Daniel Wrenne
00:00:27
Today. I’m talking with Rich Ricci. Rich is a Physician Mortgage and Jumbo Loan Specialist at Truist Mortgage and has been working there for over 14 years. I’m excited to talk with Rich today and get into the basics of physician mortgages. We talk about how qualification works, how credit scores play into it, and best practices you can use when shopping for lenders and comparing rates. We also get into the differences, physician mortgages and conventional loans, and talk about why it’s important to be an educated mortgage consumer. If you have a physician mortgage or are considering one in the future, you definitely will enjoy today’s conversation.
Rich, what’s up? Thanks for joining us on the podcast.
Richard Ricci
00:01:03
What’s up buddy?
Daniel Wrenne
00:01:03
Rich and I go way back, we were fraternity brothers back at University of Florida. How long ago was that?
Richard Ricci
00:01:10
Oh, geez.
Daniel Wrenne
00:01:11
Fifteen or so years?
Richard Ricci
00:01:13
At least 15 years.
Daniel Wrenne
00:01:14
Back in the good old days. It’s always good to catch up. Before we jump in, I know Rich, but just for the listeners, can you give us kind of a rundown on you?
Richard Ricci
00:01:25
First, professionally, I work for SunTrust, which is now Truist Mortgage, and I am a Producing Sales Manager. What that means is I manage a team of loan officers and I also originate my own loans. I live in Jacksonville, Florida. I am married to a beautiful wife who owns her own insurance agency and I have four-year-old twin boys and a seven-year-old daughter. Other than going to UF and being your frat brother, that’s about all.
Daniel Wrenne
00:01:55
Yeah. You’re living the quarantine life, I’m sure with the three kiddos has been crazy.
Richard Ricci
00:02:02
Yeah, it has been crazy.
Daniel Wrenne
00:02:04
The market has been crazy too, right? What’s up with mortgage rates?
Richard Ricci
00:02:08
Mortgage rates are the lowest that they’ve ever been. They keep saying historic–
Daniel Wrenne
00:02:13
They can’t get any lower.
Richard Ricci
00:02:15
–historic lows. Right now, we’re at as low as it’s ever been in the history of our country. What that’s doing is, even though the economy isn’t as strong as it could be because of the Coronavirus, it’s not like 2008. You have pockets of people that are struggling right now, but there are many people who are still doing well and are taking advantage of the rates. They’re continuing and they are predicting that they’re going to stay low through 2021.
Daniel Wrenne
00:02:46
I have noticed some strange things happening in general with jumbo rates and then various lenders rates are all over the place. They’re not as comparable across the industries as they used to be. Is that accurate?
Richard Ricci
00:03:00
Yes. Another thing that’s made this kind of a weird time is because rates are so low, volume is through the roof. Lenders can’t handle the volume, they’re over capacity. Whereas maybe a processor before this last year, they probably had 40 loans a piece in their pipelines. Right now, they’re probably at 90 plus. The bank has two options, they can just keep stacking up loans and not be able to process them because they don’t have the capacity, or they can stop the flow by raising rates.
00:03:36
You’ll see this with some banks, especially Refis. Refi rates are typically a lot higher than the purchase rates right now, because they need to stop that so that they can focus on the purchases. That’s why it’s hard to tell because institution to institution will be different depending upon the day.
Daniel Wrenne
00:03:55
It’s basic supply/demand going on. You work in physician loans and in jumbo loans as well. What exactly is the physician loan?
Richard Ricci
00:04:08
I do all loans, but I specialize in the physician loan. The main benefit of it is, it’s a lower down payment with no PMI. PMI for the people who don’t know is Private Mortgage Insurance and that’s required on all loans where you put down less than 20%. That is an extra payment that you pay to a separate insurance company that ensures the bank should the borrower foreclose.
00:04:36
It really isn’t benefiting the borrower in any way, but it’s a necessary evil most of the time. For the physician loan, they don’t have to pay the PMI, they’re putting down less money, if any, and it’s structured specifically for physicians. Physicians have a lot of student loans for the most part, so it’s more lenient when it comes to student loans, they allow the physician to close before their contract start date. There are little things in there other than just the low down payment and no PMI tailored specifically to physicians
Daniel Wrenne
00:05:11
How does the student loan work? Did they just not do a standard amortization, and they use the actual income-based payment?
Richard Ricci
00:05:20
Yeah. Different banks will do this in different ways and guidelines change. Our guidelines at Truist if they are in IBR or Income-Based Repayment, as long as I can show that their payment is going to be like that for the next year or so. If they’re a resident and they’re moving on to become an attending physician and their salary’s going to go way up, I have to factor that in. I can use the IBR payment, or if they’re a resident and it’s deferred, I don’t have to count the payment against them. A lot of the other loan programs you have to take 1% of the balance or you can’t take the IBR because it’s not the fully amortizing payment.
Daniel Wrenne
00:06:03
How does the lender, in general, decide on the maximum they’re willing to loan any given individual or specifically with a physician loan?
Richard Ricci
00:06:13
It’s all based on the debt-to-income ratio.
Daniel Wrenne
00:06:16
What is that?
Richard Ricci
00:06:17
Debt to income ratio is how much you’re paying out compared to how much you make.
Daniel Wrenne
00:06:22
Collective debt payments.
Richard Ricci
00:06:23
Correct. That’s monthly debt, not total. A lot of people are under the misconception that it’s like, they’ll say I have $500,000 with the student loans. I don’t necessarily care about that number, I care about what the monthly payment is. If you take your gross monthly income–
Daniel Wrenne
00:06:41
Gross is pretax.
Richard Ricci
00:06:42
Gross is pretax. And you multiply that by a typical guideline. 43% is the max and they’ll do exceptions over that, depending upon how strong a borrower you are. But 43% of the gross income is basically the max debt you could have for the month. That includes your mortgage payment, which will include principal and interest, taxes and insurance, or any HOA dues on that property. Plus, any monthly payment you have that reports to your credit bureau, car loans, credit card minimum payments, any unsecured loans, student loans.
Daniel Wrenne
00:07:20
If I have no debt or maybe I just have a little student loan payment, what does that translate to in terms of an amount, roughly?
Richard Ricci
00:07:28
As far as?
Daniel Wrenne
00:07:29
The loan. Let’s say I’m a resident and I’m making $60,000 a year, I just have a $100 a month student loan payment or less. Ballpark, what’s the ceiling on the max physician mortgage you would be able to get at that income level?
Richard Ricci
00:07:44
About $250,000.
Daniel Wrenne
00:07:44
$250,000?
Richard Ricci
00:07:46
Yes, for a resident making about $60,000, that’s usually the max. Unless they’re putting more down or they have a gift from someone, But that’s usually the max loan amount.
Daniel Wrenne
00:07:57
What’s the typical encounter you have? Is it a resident or fellow comes to you, and they say, “Give me the max.” Or is it normally, “I have a budget.” Or is it kind of 50/50?
Richard Ricci
00:08:07
Most of them have a budget and most of them understand. I had a resident try to buy a $1.2 million house in Miami and I was like, “Yeah, well, we need to talk about this.” But most people understand because they talk to their friends who have already done it and they’ve bought a $200,000 house or whatnot. I try to make sure that I drill into them that I don’t really care about what the max is or what they qualify for, because that is not necessarily what’s good for them. Right? It’s about what you’re comfortable paying. When you talk to someone like you, who will financially plan for them, that’s more important than what they qualify for.
Daniel Wrenne
00:08:50
The other challenge with the maximum scenario we were just talking about, that leaves in that scenario, roughly like $1,000 a month give or take after the principal and interest taxes and insurance to the full mortgage payment. Maybe you can get by on $1,000 a month, but maybe you can’t. That’s before repairing the house if something happens, so it can be a stretch. How about credit scores? How do they play into the whole picture?
Richard Ricci
00:09:17
That’s going to be different from lender to lender too. First, credit score is important for interest rate, the higher the credit score, the better the interest rate you’re going to get. Usually depending upon the institution, 740 or above will get you the best rate.
Daniel Wrenne
00:09:33
Pretty much everywhere, most places?
Richard Ricci
00:09:35
There are some that will have another kicker at 760 or 780, but most of the time it’s 740. There’s usually a credit score requirement. For instance, right now we’re not doing 100% financing. We do and we will again, but during COVID we require 5% down. Before this period, you needed at least a 720 for 100% financing. Between 700 and 720 you could do 95% and 660 and above you could do 10% down.
Daniel Wrenne
00:10:10
Did it also affect the interest rate the lower your credit?
Richard Ricci
00:10:13
It offsets a little bit because the more you put down the better the rate is too. If somebody has a 660 and they’re putting down 10%, it’s probably not going to be that bad.
Daniel Wrenne
00:10:24
If I’m in medical school and I want to buy a house in residency, should I be looking at my credit score? Or when should I look at my credit score in preparation?
Richard Ricci
00:10:36
I wish this was something they taught in high school. It’s so important. You should be doing it immediately. If you’re listening to this and you don’t have good credit, start working on it now because that is going to impact you for the rest of your life. A couple things that I’ve noticed from residents specifically is they’re going from college– and I don’t know about you, but I didn’t really have much credit in college, other than that-shirt, I signed up to get.
Daniel Wrenne
00:11:09
Five-hundred-dollar Capital One card?
Richard Ricci
00:11:11
Exactly. They’re going from college to medical school, straight into residency. A lot of times they don’t have a lot of money when they’re in medical school and they keep everything in their parents’ name. I need a specific amount of credit trade lines, they are important. They call any open account a trade line, so a credit card or a car loan. I’m looking for at least three that have at least 12 months of history on them.
00:11:38
Now, if they don’t have that, and a majority of them don’t, I can build trade lines through a cell phone bill, rent, stuff like that. But if everything’s in mom’s name or dad’s name, then you have built no history. Building a history is really important so that you can show the lender that you are able to make a payment on time for a long time.
Daniel Wrenne
00:12:05
So, it could be as simple as having a credit card that you just use for gas, and you pay it off every month and you do that through medical school. That’s kind of one line?
Richard Ricci
00:12:16
Absolutely. I tell people, if you have to open up three credit cards, do it. Don’t open three credit cards and charge the heck out of them, just use it for gas. The other thing is pay it off in full. If you’re ever paying interest on a credit card, you shouldn’t have credit cards. You need to pay it off in full. If you have a credit card that only has a $500 limit, you cannot charge it up high because anything over like 50% of the limit is going to hurt your credit score. Utilization is important, so you’ve got to keep the balances low as well.
Daniel Wrenne
00:12:54
What’s the ideal utilization, is it 35% or less?
Richard Ricci
00:12:57
Around 30, 35%? Yeah.
Daniel Wrenne
00:13:00
Do you have any places where people can check credit scores for free or low cost?
Richard Ricci
00:13:05
You can do Credit Karma, they’re great. It tells you exactly what’s going on and it gives you alerts and stuff. But the scores are way higher than what we see and that’s everywhere. Any score that somebody sees at home, unless they are specifically asking for the mortgage score model, which you can do @myfico.com. It’s kind of hard to find, but it’s the mortgage lender scoring model or something like that. But if they don’t pick that my score’s going to look way different than what they see.
00:13:38
There’s a different model for everything out there. Credit cards have a different model. There’ll be different scores between a credit card, a car loan and a mortgage. What they see online at home, sometimes those like the Credit Karma goes up to like 900 as the top score. Nothing goes that high on our model. As long as they aren’t fixated on the score, but more of what is on the credit report and making sure there’s nothing derogatory or incorrect.
Daniel Wrenne
00:14:10
Yeah. On Credit Karma, you can see your lines of credit and you can see your payment history and your utilization percentages, right? Which are the key factors that go into…
Richard Ricci
00:14:20
Yeah. That’s why I think it’s a really good tool. Every time somebody says, “Well, I’ve got a 9,000 credit score.” That’s not what it’s going to be.
Daniel Wrenne
00:14:32
It’s not the exact same calculation, it’s just to get a good range. With the physician loan, I think you had mentioned about the 10%, 5% and whatnot. I’m curious, maybe if we’re just comparing like a conventional loan, 20% down to like a physician loan. Whether it’s 0% down or 5% down, or, you know, a, a much lower down payment. Besides the PMI difference and the other things you mentioned, I’m curious about the cost difference. How do they compare, not specific numbers, but generally?
Richard Ricci
00:15:06
Roughly, for instance, right now, the low down payment, the lowest of the low, so the 5% down is a little bit higher than a 20% down conventional. Then 10% down will be real close to what conventional is. Depending upon the day or the month, there was a time where my 100% rates were lower than the conventional.
Daniel Wrenne
00:15:34
What?
Richard Ricci
00:15:35
Yeah. It just depends on what the model looks like to the actuaries that are figuring all this stuff out. I’ve had times where it’s lower. The majority of the time, it’s a little bit higher because you’re not having to pay the PMI, so you have to pay for that somewhere. But it’s definitely to a point where you’re saving money. When you get up into jumbo territory, which is 5, 10, 400 or above, most banks require 20% down, no matter what. Being able to put down less than 20% on a jumbo loan and still getting a really good rate is pretty strong.
Daniel Wrenne
00:16:12
Yeah, that has its own appeal. If you exceed that jumbo number. What was the jumbo limit again?
Richard Ricci
00:16:18
510/400.
Daniel Wrenne
00:16:21
That’s most areas of the country?
Richard Ricci
00:16:23
Yeah.
Daniel Wrenne
00:16:24
There are a few exceptions to that I believe.
Richard Ricci
00:16:26
Yeah, in some high-cost places, but the majority of it is that.
Daniel Wrenne
00:16:30
I’ve seen where lenders with physician mortgages will keep them in the physician loan program as they refinance, get new loans or new houses. On occasion, we’ll see it where it’s actually detrimental to them. For instance, if their house is appreciated and they have 20% equity by that point in time. I think for our listeners, physician loans are great, but when you have 20% equity, generally the conventional route is typically going to be better. Right?
Richard Ricci
00:17:06
Yeah.
Daniel Wrenne
00:17:06
Aside from the exceptions you made.
Richard Ricci
00:17:08
Not always in jumbo land. A lot of times my rate is better on a doctor loan rather than a regular jumbo. If I had 20% equity, I’d just look at it and do what’s best for them. As far as conventional, typically if they have 20% equity, it would be better to do a conventional loan. Unless there’s something else at play, like the student loans that we talked about, or there’s another reason why they didn’t qualify for that. But I don’t know why they would do that if it wasn’t in their best interest.
Daniel Wrenne
00:17:43
If I’m talking to five lenders or more than a few, is it all about interest rate?
Richard Ricci
00:17:49
No, of course not, don’t be ridiculous. Interest rate’s important, right?
Daniel Wrenne
00:17:54
That’s what they advertise a lot of times. I guess they’ll advertise closing costs.
Richard Ricci
00:17:59
Yeah. That’s another misleading thing, you can be misled by both of those. With interest rates, you can say, this is the rate, but there could be points they could be charged in origination fees to lower that rate. Or the guy that’s talking about no closing cost loans on the radio all the time. He’s just giving you a higher interest rate. I’ve seen those rates, they’re a percent and a half higher than what the market is.
00:18:25
That being said, rate is really important especially if you have a 30-year loan, that can add up. If I’m the best loan officer in the world and someone’s beating my rate by 1%, I’m not going to be mad that someone’s going with that person. But if it’s close or the same, being an advocate for the doctor or whoever the borrower is very important. There are a lot of folks out there, it doesn’t matter what bank you work at, there’s good and bad. Same with realtors and financial advisors there are good ones and there are bad ones. If you’re there as their advocate and you are explaining the process and you know what you’re doing, so you’re not submitting a loan that’s just going to get denied because you don’t know what you’re doing, I think that’s really important.
Daniel Wrenne
00:19:15
Yeah. A client sent us an advertised rate of 1.99% on the 30-year mortgage. We were like, “What? This doesn’t make sense.” At first it checked out, but then I finally realized that they had a bunch of points kind of built into it. It was $15,000 closing costs for the situation. Then I was like, “Oh, okay.”
Richard Ricci
00:19:35
Yeah. It’s in the fine print, it says, two origination, one discount or something.
Daniel Wrenne
00:19:39
Yeah, you really have to look at both, right? Closing costs and interest rate together if you’re really wanting to do an analysis between more than one mortgage to compare them. You have to look at both closing costs and interest rate.
Richard Ricci
00:19:52
Absolutely. When somebody gets an estimate, the bottom line can be manipulated very easily. There are specific things that you want to compare. If you can get an APR, that’s the easiest way to do it. The APR is the annual percentage rate and it’s a hypothetical rate that combines the interest rate, plus the closing cost amortized over a 12-month period. So, if I have a 3.25% rate and my closing costs are very low, my APR should be just above that, like 3.3 or something like that.
00:20:26
Now, if somebody had the same rate as me, a 3.25%, my APRs 3.3 and theirs is 4. That means their closing costs are a lot higher than mine. That’s a really easy way to do it. The other is to look at the rate and then compare the lender fees and throw out all the rest. You need to pay attention to that because that’s going to be something you’re going to have to pay. But title fees, city and state taxes, escrows, all of that is going to be the same, no matter what bank you go with.
00:20:54
If you were looking at the origination fee, which is any points, processing underwriting, application fee, credit report fee, appraisal fee, those are specifically lender fees. If those are lower and the rate is better, that’s who you go with. I usually coach people through it and if I review it and the other guy’s better, which never, ever happens, I’m not afraid to tell them, it’s not about me.
Daniel Wrenne
00:21:25
What’s the loan estimate? Is that the document that’s required to be provided on the front end?
Richard Ricci
00:21:31
Yep. It used to be called the good faith estimate and they changed it and then now it’s called the loan estimate. You might hear some mortgage guys call it an LE, but it’s the loan estimate plus everything that you could possibly want to know about the loan as the payment amounts. It talks about all the fees involved. It talks about APR and prepayment penalties and so forth. Anything you could want to know is on there.
Daniel Wrenne
00:22:03
At what stage in the game are people supposed to receive that?
Richard Ricci
00:22:08
Within three days of their loan application. An official loan application is not a pre-approval. If they do a pre-approval, they’re providing all their information, but there’s no address. Because there’s no address, we just run the app and we can send out what’s called a pre-approval. As soon as you add the address, that turns it into a real live application and that happens when you get the contract. So, I get the contract, I add the address that turns it into an app and then I’ve got to send out the mortgage disclosures, which includes the LE and a bunch of other documents within three days.
Daniel Wrenne
00:22:44
Can you do loan estimates without checking credit?
Richard Ricci
00:22:47
Yes. But not official ones. Ours is called a fee worksheet, it has all the same info, but it’s not an official loan estimate.
Daniel Wrenne
00:22:55
Would you prefer to know if somebody is talking to more than one lender on the front end? Is that helpful to know?
Richard Ricci
00:23:01
Yeah, it’s always helpful to know. Mostly so I can help them understand these things that we were just talking about. Sometimes we’ll get, get into it and then they’ll be like, “I’m going with this guy, he’s got a lower rate.” Then I’m like, “Hold on, let me see that estimate.” And it’s like, “He’s charging you two points, it’s not better” people don’t understand.
Daniel Wrenne
00:23:25
Yeah. I think the thing we see is that the lenders sometimes will, when they don’t know that somebody’s talking to five different other lenders, they’ll all check their credit, and they have like five credit hits. I don’t know how that affects their score, my guess would be potentially negative.
Richard Ricci
00:23:41
The rule is supposed to be that if you’re shopping for a mortgage, you have a two-week period where you can get your credit pulled numerous times.
Daniel Wrenne
00:23:50
As many times as you want.
Richard Ricci
00:23:51
It’s only supposed to hit you once
Daniel Wrenne
00:23:53
As long as it’s within the two-week threshold?
Richard Ricci
00:23:55
Correct.
Daniel Wrenne
00:23:56
Okay. Is there wiggle room on rate closing costs? Do most lenders show like their best cards on the front end?
Richard Ricci
00:24:06
Not all of them. The way that it works now is you have your rate on your rate sheet and then if somebody’s shopping you and you can prove that someone’s shopping you, you might have a little wiggle room there. It’s not always how it works. You might not have that threshold at that point, but some folks will come with something that’s not as strong as they do when they find out somebody’s shopping them. I try from the beginning, just give them my best.
Daniel Wrenne
00:24:40
In your experience with the average person, how often do you think they either refinance or move?
Richard Ricci
00:24:47
As far as doctors specifically?
Daniel Wrenne
00:24:50
Yeah.
Richard Ricci
00:24:51
That’s a tough question to ask because it just really depends. The refinance part just depends on rates.
Daniel Wrenne
00:24:57
It’s been fairly often.
Richard Ricci
00:25:00
Yeah, but now I’m refinancing everyone that I’ve done in the past two years, because rates are so low. It’s been odd though, because in 2018, there was a period where rates were in the high fours. You’ve got somebody who will refinance in our year or two or maybe less than a year and it still makes sense. We’re not really used to that happening as much, but so there’s more refinances happening. As far as purchases, usually a doctor or resident will buy one in residency and then when they start their attending job. Most of the purchases that I have come before their start date. Once they get a contract, whether it be incoming resident, fellow or attending physician, when they’re moving, that’s usually when they’re calling the realtor and the loan officer.
Daniel Wrenne
00:25:57
I think most of our clients on the front end tend to believe that they’re going to stay in the house a long time and not refinance it. Or at least that’s the math that they’re doing. But in reality, our experience is probably every two to three years collectively, they’re either refinancing or moving. These mortgages tend to not stay as is for the full term. I would guess that it’s extremely rare for a mortgage to be carried out all 30 years.
Richard Ricci
00:26:27
Yeah. You’re 100%, right. A lot of the ones that we’re doing are in various stages of a young career. They’re usually moving up two or three times and then they might buy that forever home. But yeah, you’re right, I do see more repurchases and refinances.
Daniel Wrenne
00:26:48
Do you see mostly 30 year versus 15 year or some other option?
Richard Ricci
00:26:53
Mostly, I mean, most people do a 30-year fixed. Some of them will ask for a 15. My philosophy and what I do in my life with my mortgages is I do 30 for all of them and then I pay extra. I calculate how much I need to pay to pay it off by a certain date, whether that’s 15 years or whatever, and make sure that I do that. God forbid, if something bad were to happen I’m not making as much money.
Daniel Wrenne
00:27:18
Or there was a global pandemic or something.
Richard Ricci
00:27:20
There’s the global pandemic. Then you can go back to paying the 30-year fixed rate. If you lock yourself in at 15 years, you have no choice. If the rate difference is big enough, it can make sense right now they’re not really that different, which is strange, the spreads aren’t as big. You might be like three eights of a percent difference between the two, which is not worth it in my opinion. But other people don’t have the willpower to pay extra, so they need to make themselves pay 15 and that’s fine too, but that’s just how I look at it.
Daniel Wrenne
0:27:51
I don’t think the average person is as disciplined as you in regard to overpaying their mortgage regularly. In my experience seeing people’s finances seems that it’s extremely common for people to start out with the intent of overpaying something. Then reality hits and they kind of end up just paying the minimum payments or whatever.
Richard Ricci
00:28:13
Yeah, and it depends on the person. I’ve done a lot of refinancing of folks that I originated a year or two ago and a lot of doctors had paid down a lot. Once they become an attending physician, they pound out those student loans.
Daniel Wrenne
00:28:37
Next on the chopping block.
Richard Ricci
00:28:38
Yeah, next on the chopping block is the mortgage.
Daniel Wrenne
00:28:40
Yeah. Cost is definitely important, but I wanted to get your take on people. Working with a lender, how does that play into it? What’s the role of someone like you in the process and why would it be important? What is the value in working with somebody that knows their stuff?
Richard Ricci
00:29:04
The “knows your stuff” part is important, especially if you’re working with specialty products like the physician mortgage. It has a lot of caveats to it that doesn’t really matter to the customer. They may have a little bit more documentation they have to provide, but the guidelines are what’s important. You need to know how to structure it. If you don’t, you could wind up in problems downstream. The loan officer in the beginning is like the gatekeeper, the quarterback. They’re taking the app and they’re reviewing it and they’re making sure everything looks good before they pre-approve it.
00:29:38
Now, if I find something that isn’t going to meet the guideline, or it’s going to be a problem, that’s something that you’ll either work out up front or we can’t do it. I would much rather give bad news saying I can’t do it than submit a loan, throw it against the wall, hope it sticks and have it denied the day before closing, when everyone’s been counting on it. That’s huge.
Daniel Wrenne
00:30:08
Especially when you’re moving across the country to a brand-new location and expecting to move into the house the next day.
Richard Ricci
00:30:14
Yeah, absolutely. Then just knowing your stuff doesn’t mean you’re not going to try to take advantage of the person. It’s important that you’re working with somebody who is honest and, and cares about you. The caring part is very important because if you’re just in this for the money and you know this it’s the same in your business. If you were just in this for the money, you could make a heck a lot more money.
00:30:45
But you might have less happy customers. You’re not creating raving fans if you’re just in it for the money. If you’re there and you’re out to look out for them, they can tell too by the way you talk to them and help them through it. My philosophy is I try to limit stress as much as I can to everyone around me, including my processors, underwriters, customers, realtors and everyone.
Daniel Wrenne
00:31:11
And my wife and family.
Richard Ricci
00:31:13
Wife, family and me. There are some loan officers out there that will just push, push, push for something that isn’t even needed and create stress for no reason. If you’re just honest and you’re upfront about things and if you have a problem, you tell them right away rather than hiding it, that’s huge.
Daniel Wrenne
00:31:35
Are there any specific examples of what people should look out for with lenders or mortgage brokers from a cost standpoint or service standpoint, just things that come to mind that might pop up?
Richard Ricci
00:31:47
One thing is you want to make sure that the loan officer you’re working with is not someone who’s just going to submit it and forget it. It goes from me or someone on my team to the processing and underwriting folks. There are a lot of loan officers that are our salespeople, and they’re focused on the next deal, the next deal, the next deal. You have to be to make money, but if I don’t follow that loan all the way to closing, it’s not going to turn out right. That’s nothing bad about my back room, but nobody wants that loan to close more than me. That’s a question I would ask, “How involved are you? If I have a problem with the processor, can I call you, will you be there to help me?” That’s really important too.
Daniel Wrenne
00:32:34
Yeah, I guess that could lead to delayed closing dates or worse.
Richard Ricci
00:32:38
Yeah, for sure.
Daniel Wrenne
00:32:40
Awesome. Well, as we wrap up, any big changes you see coming down the pipe, either in the industry or can you predict the future of rates? Just kidding.
Richard Ricci
00:32:50
I think rates are going to stay low for some time. The FED is pretty much in it. As far as the environment we’re in, the mortgage industry is booming right now, real estate is doing well, rates are really low. I don’t know if you’ve seen this, but there are a lot of folks that do doctor loans that don’t do them anymore. Or there’s banks that have stopped doing jumbo entirely. I talked to a doctor about this the other day because we changed some of our guidelines because of COVID and the doctor said, “Well, my business is better than ever. Why are you doing this to me?” I was like, “It’s not that, it’s basically portfolio loans like the doctor program and jumbo loans are paid for by the bank’s balance sheet. Whereas, Fannie Mae, Freddie Mac, FHA, um, those are guaranteed by the government, so that money stays on their balance sheet and they pay for it with deposits.” So, less deposits now during COVID more loans, so it’s out of whack. That’s why they’re pulling back on those things. That’s something to look for too, is the portfolio space.
Daniel Wrenne
00:34:02
Rich, I really appreciate you sitting down with me. How can people find you if they have questions or if they’re looking for help on this type of stuff?
Richard Ricci
00:34:08
My website is www.suntrust.com/richard.ricci and Ricci is spelled R-U-C-C-I. You can also find me on Facebook on my personal or business page.
Daniel Wrenne
00:34:26
Well, I appreciate it, man.
Richard Ricci
00:34:28
Absolutely. Thanks for having me, man,
