#52| Are You Rich Or Are You Wealthy

In this episode with Lane R. Gerhardt, we talk about how buying a home with student loans and a short work history can feel impossible until you understand how physician loans and bank portfolio lending actually work. 

We talk through when buying makes sense during training, how to avoid overspending after the first big paycheck, and why chasing the “perfect” rate can cost you. 

• what “physician loan” means in plain language and how it differs from conventional mortgages 
• why many doctor loans come from bank money and what banks want in return 
• how low or zero down payment and no mortgage insurance can change the math 
• the biggest timing question: how long you plan to stay in the home 
• lifestyle realities of ownership during residency and fellowship hours 
• common mistake: buying the max you’re approved for 
• “rich vs wealthy” mindset and delaying gratification to build long-term wealth 
• how private banking helps with complex income and exceptions 
• rate advice for shifting markets and avoiding “perfect” decisions 

To connect with Lane R. Gerhardt or explore his work further, feel free to visit the link here. 

Subscribe, leave a review, or share this with somebody that you think might benefit from this episode. Connect with me on Instagram or email me at amanda@abtnhomes.com with your thoughts, topic ideas, questions, or even guest suggestions.

Transcript

SPEAKER_03 0:04

Hello, everyone, and welcome back to the show. Today is an episode that we're gonna dive into, and it's something that I feel like every physician family that I ever work with, ever talk with, they eventually ask me about, which is financing. Whether you're a resident, a fellow, or already in attending, buying a home can feel intimidating, and especially when you're carrying student loans the size of a small mortgage and juggling a demanding career. So today I brought in someone who truly gets this world. My guest, my friend Lane Gerhart, a mortgage banker with over 20 years of experience specializing in private banking and physician loans. Lane has helped everyone from interns buying their first condo to established doctors purchasing their dream homes. And he knows how to navigate the complexity that comes with physician finances. Lane, welcome to the show.

SPEAKER_00 1:00

Thank you for having me, Amanda. I couldn't be happier to be here. I uh wanted to let you know I'm a big fan of your podcast. No, I'm serious. I listen to it. You're great, and your guests and conversations are top-notch. I can let you know I've been a little nervous leading up to this, hoping that I can live up to the standards that you have set forth.

Lane’s Path Into Physician Mortgages

SPEAKER_03 1:21

No, well, you're so kind to say that. I am honored to have you here and just have you share your wealth of knowledge and expertise with our listeners. I feel like you always have so much value that you bring to the table. And so I think it's gonna be a great episode. And I just appreciate you being here. All right. So before we jump in, I just I would love for you to share a little bit just about your background and how you ended up, especially specializing working with doctors.

SPEAKER_00 1:49

I'll boil it down to a 30-second story. Go for it. But I I was I was raised in New England out of Hartford, Connecticut, wound up in Knoxville, Tennessee for college, University of Tennessee, go Valls.

SPEAKER_03 2:02

Yeah, I was gonna say Go Valls. I got a kiddo there too.

SPEAKER_00 2:05

At that time and even after college, I was a civil engineer. So I went into engineering, I became an engineer, and I turned 30 and realized that there's more to a career than that, that um it wasn't a good fit for me. And like many people who do what I do and what you do as well, you know, we sort of found our way by happenstance into mortgage. And I got into mortgage, jumped into it. I love it, I've loved it ever since. My engineering background, it helps in the way I think and approach problems analytically. Of course, you know, the math and the numbers aren't there, but what I really enjoy, what I really like about the career that I've chosen is I'm in one of the few careers, and you are too, where we get to help people, you know, truly help people directly. Obviously, physicians and nurses and anyone in the medical world gets to do that, teachers and policemen, but you know, mortgage loan officers and real estate agents, we are helping people get through what can be one of the most stressful, important decisions and processes that they experience. And it's very rewarding and satisfying. I bounced around from mortgage companies to banks to big banks, little banks, and I've I've settled in with good, mid-size, well-established banks. And in so doing, have been able to help many of the private wealth, higher income earning customers that the banks have, and of course, physicians being one of those. But I help a lot of uh not a lot, but you know, we've helped football players, hockey players, um, musicians, celebrities, and um, you know, very important physicians and everyone else in between, you know, that's how I got into it. And I really enjoy the physician side of things for reasons we'll get into, but you know, primarily because like anyone else, we go to bed at night, talk to our spouses, worry about things like furniture and houses and kids and dogs and minivans and all that too. And so if I can help someone get to a better place in any way and make it a little less stressful, then I've considered, you know, job well done.

What A Physician Loan Really Is

SPEAKER_03 4:21

Yeah, yeah. Well, thank you for sharing that. And I know you've spent over 20 years in this industry. So for the residents and the fellows that are listening, or their significant other partner, can you explain in just bird's eye view, simple terms, exactly what a physician loan is and how it is different from the standard conventional mortgage?

SPEAKER_00 4:45

First thing I would say is that there is no official physician loan, doctor loan program, or guidelines or really, it's it's more an industry term generalization. But generally speaking, the difference between a physician loan and a conventional loan starts with primarily the down payment. These loans traditionally have very little, if zero, down payment required. Another benefit with that is most of them don't charge or have mortgage insurance as well. So it's a it's a loan that is easy to get in terms of down payment and affordable with the mortgage insurance being removed. Some doctor loans don't take into account uh student loan payments when we qualify to make it easy, but they're primarily designed. I'd say most of them are primarily designed for young starting out residents, fellows, attendees, new physicians who haven't yet been able to accumulate three, five, 10%, 20% for a down payment, but want to get into the home buying market. So that's the big difference is that it usually requires no down payment, or most every other loan does require some form of a down payment.

SPEAKER_03 6:04

And, you know, full disclosure, we have purchased many homes with um physician loans in in the past. And it's such a great platform to give physicians options. Whether or not they take it, you know, obviously it depends on where they're at in their journey, what their financial situation looks like. But I love that it is an option there when I think a lot of times they automatically think they don't have an option when they haven't saved up the money or they've got these huge student loans. And so it definitely was a lifeline for us. So a lot of the listeners think I have six-figure student loans, not much work history. Why would a bank want to work with me? And so, and I have this conversation many times with my, especially those out of training or right at the beginning of training. And so, why do banks create these special programs for these physicians? And why do they consider them a good candidate to loan the money?

SPEAKER_00 7:02

Right, right. Well, that's a good question. You know, it would be nice if we said, well, we want to give back to our healthcare providers and give them a really good leg up. But no, there's a financial reason. And the first thing I would say is, which you probably need to understand, is most of these doctor loans are bank loans, meaning they're not brokered, they're not conventional Fannie Mae. They're actual bank money. And banks want to lend those to those physicians. Why? Why do we want to do that? Ultimately, we want that banking relationship.

SPEAKER_02 7:36

Sure.

SPEAKER_00 7:37

Okay. And the first need primarily with a physician is a mortgage, right? So, hey, here's a mortgage. Oh, and by the way, we can do HELOCs, we can do deposits, money markets, CDs. Here's a private banker to help you because we know that that intern or that new doctor will progress and make more money. And then maybe they might buy that second or third home or open a practice and need a business loan. And we want to get that relationship established. So we don't just give these doctor loans out so we can get the interest from the doctors every month. I mean, obviously that's part of it. But really, what we're after is a long-term banking relationship where we can grow together. And the best way to start is with a home loan.

SPEAKER_03 8:23

And I will say I love that foundational part of what you guys do and what your bank offers because I think you're great at not only building that relationship and creating this long-term plan for them and being a service to them, but you are really good from an educational side of things. So no matter where they are at in this journey, they are probably some of the smartest people we know, but it doesn't mean that they necessarily know how mortgages work and the financial side of things. And so I feel like you do a great job of explaining that and meeting them wherever they are at with their needs and their knowledge.

SPEAKER_00 9:01

I do take pride, if you will, in that ability to teach, help, and assist. And it can be anyone. Yeah, it can be a first-time home buyer or it can be a 10th-time home buyer. Right. There are things that you may not know or think about or are worried about. And ultimately, at the end of the day, we want to have our questions answered and not feel like we're missing something, right? Especially with a big purchase with a lot of zeros at the end. And so that's what we really focus on is just answering any and all questions whenever they may come.

When Buying Beats Renting

SPEAKER_03 9:33

Yeah, yeah. No, I agree. And so you had just said, like you work with these people in all stages, you know, interns, fellows, established doctors. Would you say, is there a right time during a medical training to think about buying a home? Would you automatically tell them, wait until you're done with training and you've got your attending job and a different salary? How would you answer that?

SPEAKER_00 9:58

I would zoom out a little bit and maybe not just interns or residents or doctors, but anyone really. The first question you need to ask is Is this the right move for me and my family at this situation? Financially, emotionally, spiritually, uh, you know, geographically. So first and foremost, we figure out is this worthwhile in your current situation? Everyone's different. But zooming in a little bit and being a little more general, I would say the first bar, the first question is how long do you intend to live in this property andor this city? Okay. If the answer is less than three years, it's probably not a good time or a good situation to buy. We need at least two or three years to let a property appreciate. You know, real estate is an asset that appreciates as opposed to a car that depreciates, like that loses value over time. Homes appreciate. But if you only live in a house for a year or two, there are costs in buying and selling a home. And if you only live there for a short period of time and you haven't developed that appreciation, what we call equity, then it doesn't make sense. And you could actually lose money when you buy and sell. So the first question is are you going to live here for a few years or more? And if that answer is yes, then of course we start looking at can you afford this? You know, do you do you want to? Do you want to own something? Do you want the hassle or responsibility, if you will, of maintaining a property? You know, when you own a house, you are the landlord, you know, you're the handyman, you're everything. So does that fit into your lifestyle? Are you working 70, 80 hours a week? You know, are we going to live in this city maybe two years? Well, then no, you're probably better off renting. But if you are going to live there for three or more years and you do want to start that process, owning a home and developing the equity and building the wealth is the same thing as investing in a you know an IRA or a 401k. The earlier you do it, the better. That compound interest, you know. Albert Einstein said that the eighth wonder of the world is compound interest. I mean, it truly is. The sooner we get started, the better. Same thing with buying a house. But if it's not right or you're you're uh you know apt to move soon or or lose money, then no, that isn't the right time. So I would say anyone who has a good, clear three-year window on where they'll be, that's a really good person to consider maybe buying a house. And if that window is at all foggy or hard to see through, you're probably better off renting until you get your feet under you.

SPEAKER_03 12:38

I agree. And I love that answer. And I a hundred percent go through those same questions with my clients because it's not a one size fits all, right? Everybody's training path is different, income path is different. You talked about the family situation being a little bit different. And then whatever their goals are, right? Their real estate goals, if they are planning to hold on to this property, even if they do leave or they move into a different house, is it going to be a passive rental income for them? And so I definitely agree that it is not a one size fits all and that you really need to kind of dig deep for those of you listening with your realtor, with your lender, with your financial advisor, and and kind of lay out that game plan.

SPEAKER_00 13:18

Absolutely. And you mentioned a financial advisor. Yes, the sooner the better. Have have someone to give you advice on your overall financial well-being, not just a mortgage, not just a home, right? How does that play into everything? Like you said, your life goals. I agree.

The Biggest Homebuying Mistake

SPEAKER_03 13:34

Yeah, yeah. So let's talk about mistakes because obviously I see these on the real estate side, and I'm sure you see it from a lending mortgage side. So, what do you feel like are the biggest mistakes you see physicians make when they start looking for their dream home?

SPEAKER_00 13:51

Well, I would say the biggest mistake that's easiest to fall into, and this isn't just with mortgage, it could be with anything finance related, is fellows or or or residents who've now established a career. They're they're making doctor money, right? They have their doctor position and and they've gone from you know eating ramen noodles and Cheerios for dinner. Now they can afford whatever it is they they might want. I think the biggest mistake someone makes in that point in their life is they confuse being rich with being wealthy. What do I mean? Well, I consider rich to be people who make a lot of money, right? Make a lot of money, you can buy a nice house, you can buy an expensive car, you can go on fancy vacations because you're making money. Wealthy people have a lot of money. Right? There's a there's a difference. And what I found over the years of doing this, the people who attain wealth the soonest and the best are not the ones who are spending the most money every month. They're not maxing out their income on houses and cars and boats and vacations. They're they're saving. So the biggest mistake, back to your question, would be to jump in with both feet and live a life that you haven't led before. Give yourself a chance to catch up to your life. If you are just recently removed from living on a budget, driving an older car, not going out to eat every night. Do whatever you can to continue that lifestyle for as long as you can. And that also falls into the house. Just because you can buy your dream home or the house with the fourth or fifth bedroom or the four-car garage doesn't mean you should. Find something that's a you know affordable, modest, live below your means. You know, I always think creating wealth, it's like losing weight. Simple, but not easy.

SPEAKER_02 15:46

Yeah, right.

SPEAKER_00 15:47

Simple. Live on less than you make and you will be wealthy. Right. You don't want to lose weight, eat less calories than you burn. Simple, right? But it's not easy. Uh so I think that's the largest mistake is they jump in and they want to just cash in on all the hard work, the sacrifice. I mean, you know, not just the physician, but the spouse and the family, all the hard work that you've gotten and you've finally gotten to where you are. Try to delay some gratification, buy a modest home, build some equity, take that difference in monthly payment, invest it in things like IRAs and college funds and what have you, and then let the process build. And then on your second home, your third home, now we're talking dream home. Now we have down payment because we have equity. Now we know where we fit in the world financially. And I think that's probably back to your question, that the biggest mistake is we they just get a little ahead of themselves.

Private Banking Flexibility And Exceptions

SPEAKER_03 16:40

Yeah. And I think it's great advice. I see it all the time, no matter if they are a first-time home buyer, you know, their 10th home, that because you're approved for a certain amount doesn't mean that that's what you have to spend. And I think you said it best delaying the gratification because trying to build up some traction behind you once you get that actual salary, because you're making up for lost time. Maybe it's retirement, maybe it's getting out of debt, maybe being able to put some money aside, like you said, for the kids. And so I think how we had talked about having a big plan and how you're going to attack that plan as opposed to just, you know, having the blinders on and seeing that paycheck and then seeing that big house or the big mortgage, it's easy to fall into that trap. So you come from a private banking background. How does that personalized relationship help a doctor who might have complex finances, multiple income streams, or even unique contract terms?

SPEAKER_00 17:37

Working in private banking, oftentimes my customers are outside of the box, right? A lot of customers have J-O-Bs, jobs, and that's real straightforward and real easy. Uh, here's how much you should borrow, how much you shouldn't. But when you have a lot of sticks in the fire and a lot of plates in the air financially, or even personally too, it's important to have someone who understands the overall picture and kind of what you're going through. You know, for example, it took me a while to realize how to service people like physicians, right? They're busy, they have a lot of responsibilities. They have, you know, they work crazy hours all around the clock. Bullet points are great. You know, here's five things you need to know. You don't need you, don't need a whole bunch of words. They don't need a bunch of this. Or maybe it's the spouse who's taking the lead, right? Well, you know, there might be children involved or or or pressing issues. So it really is a matter of tailoring the approach to the customer. And in private banking, you know, it does help to understand that people have complicated finances and lives, and how can we work within those parameters to accomplish what we want?

SPEAKER_03 18:49

And do you find in private banking sometimes you are not only able to think outside the box, but potentially give exceptions in certain areas that you may not or they may not be able to find with other institutions and 100%.

SPEAKER_00 19:05

You know, anyone getting a conventional mortgage, and just to shed a little color, conventional just is the term of mom and dad's mortgage, what most people get, right? Uh Fannie Mae, Freddie Mac. And those rules are written by the federal government ultimately. Okay. They're very strict. And if you step outside of a rule or a guideline, you don't get that loan. It doesn't matter, even if it makes sense, right? It's a very square peg, very square hole. Private banking or or physician loans or just loans that come from a bank, right? Bank money. The bank makes those rules. Now they're not going to just arbitrarily willy-nilly drop all their rules and regulations, but in a situation that makes sense. Oh, maybe the income is a little outside the box, but that's because they haven't sold their house yet, and they will. And if they do, they're fine. I mean, we can make those make sense exceptions on that. And that is the benefit of getting a bank loan, is that if it's in the bank's best interest, no pun intended, but if it's in if it's in the bank's best interest to say yes, right, for these other things, well, then we can do that. And that is great. It gives us a lot of flexibility. For me, doing mortgages 20 years, the worst feeling is having to tell someone that we can't do it for a what might be called a stupid reason, you know, some arbitrary guideline. It's just we can't get around. So it is nice having some flexibility to say yes and make deals work if they make sense.

Rates Advice: Don’t Chase Perfect

SPEAKER_03 20:40

Yeah. No, I I completely agree. And I know you've personally done that with some deals that that we've had. And so I I've been ever so thankful and we've made it work, and we were able to kind of move through those exceptions. So very thankful for that. So when it comes to mortgages right now, a lot of people are talking about rates, competition, competitive markets, market shifts. What's the one piece of advice that you find yourself giving doctors during this time?

SPEAKER_00 21:10

Oh boy. Yeah. Well, you know, there is a phrase that I find myself saying all the time right now. And yeah, we can talk about rates and markets and seller buyer. Uh, you know, what are rates doing? I mean, I on a daily basis, I have the rate conversation, and I'm happy to have that at some point. But, you know, rates are gonna be rates, rates be rate. Okay. What I find myself saying a lot lately, though, is don't let perfect be enemy of good. All right. What do I mean? A lot of folks are waiting for rates to come down, right? Now, you know, rates were at 3% four years ago, and they were at 8% two years ago. Right. So rates are gonna be all over the place. They've come down, yeah, they they've gotten better, and and many people are saying. Well, I'm going to wait until rates get to 5%. Maybe they're at six right now. I want them to be at five. And that's great. And in a perfect world, that's what I would do. I would wait for rates to get lower. But what happens is if rates got down to five or even before they get that low, the market will change. What do I mean? Well, there are a lot of people just like you waiting for rates to drop. And once they do, they're going to jump back in the market. And all of a sudden, what might be a buyer's market where you have some flexibility with prices and closing costs becomes a seller's market. Yeah. And that that$500,000 house you might buy today at 6% might cost you$540 at 5% six months down the road. Right.

SPEAKER_02 22:41

Yeah.

SPEAKER_00 22:42

So that's a great example of perfect being enemy of good. Another example would be, and I know you deal with this all the time with our sellers. Right.

SPEAKER_02 22:51

Yeah.

SPEAKER_00 22:52

They think it's 2021 still, and their house is worth a lot of money. And they want to start high and see what happens. And they're trying to get that perfect price. Well, what happens when you list too high? It sits and then you drop and then you become a distressed property. And then you're catching a falling knife and you've let perfect be enemy of the good. Whereas if you had gone into it being realistic, yeah. Right. With the market, you can leave the market and get the most for the house. So right now, I think you know, buyers are are feeling a little emboldened because they've been pushed around for so long, but they might be too greedy. You know, pigs get fed, hogs get slaughtered. I think that's another expression I use a lot lately is let's find something that works, if it works for you and your budget and your life. Doesn't have to be perfect. We we have good. It's really, really good. Let's go ahead and do it.

Personal Questions And Real Life Wisdom

SPEAKER_03 23:46

I think that's great advice. And I say the same to my clients where there's really no perfect house. Even if you built the house, there's still going to be something wrong with it. So I always say if it hits 85% of your needs that you guys are really wanting, it's a great house. So we need to really, really think about it. Not saying you have to, but but definitely pause and and think about it. So great advice. All right, Lane. So we're we're here at the end. I always ask guests the same two questions. The first is what advice would you offer your younger self?

SPEAKER_00 24:18

Well, if I were to go back to my real younger self, you know, maybe my just out of college younger self, I would love to explain to myself that it's the journey, not the destination. That that the journey is the destination, right? I think when we're so young and so focused on what's coming next, and you know, what's my spouse gonna be like, where am I gonna live, how much money am I gonna make? We tend to lose sight on of the fact that what makes life enjoyable and worthwhile is the journey. It's getting from A to B, not arriving at B. You know, and that's what I I I love, I love, love, love helping young families buy hoes houses because we get talking about kids and and you know, I just I remember looking back in those, you know, I have a a 20 and an 18-year-old. Uh, and I look back at those minivan years that were so hectic and busy and just going to bed tired every night. And those were some of the best years of my life.

SPEAKER_03 25:19

Oh, yeah. You know, yeah.

SPEAKER_00 25:21

And it was the journey, it was the it was making the lunches at five, you know, at night before you go to bed or whatever that made it so enjoyable. So I I would tell myself, make sure you enjoy the journey.

SPEAKER_03 25:32

Yeah, I totally agree. I think sometimes it's hard when you're in it.

SPEAKER_00 25:36

Oh, yeah.

SPEAKER_03 25:37

But really pause and and really enjoy, enjoy that moment. And speaking of uh the toddler's and the car seats and all, it just made me think of like all the little crumbs and stuff that my kids would have in their car seats. And I remember specifically one time looking in the rearview mirror and my son was eating something. And I hadn't given him anything, but he had found something in his car seat that he lived, right? He apparently had for an afternoon snack. So yeah, yeah, exactly. Great answer. And then the second one is if it's just for fun, but if your life were a reality TV show, what would the title be?

SPEAKER_00 26:15

You know, probably survivor.

SPEAKER_03 26:18

Mm-hmm. Mm-hmm.

SPEAKER_00 26:19

You know, not to get into it, but you know, there there have been struggles and and hurdles to to make in life. And back to the journey side, like that's what makes you who you are.

SPEAKER_03 26:30

Yeah.

SPEAKER_00 26:30

And my life has been about surviving, improving, and learning and and being better and getting better. I'm still on the island for a while. And while while I'm here, I I intend to win every event, every game that I can, try my best, be honest about it and and be a good person. Just lead my life in a way that my children would be proud of.

SPEAKER_03 26:54

Yeah. I love it. And and still learning, right? No matter, no matter what what age we're at.

SPEAKER_00 27:00

So it's not a good day if you don't learn something.

SPEAKER_03 27:03

Exactly.

SPEAKER_00 27:04

Right?

How To Reach Lane And Closing

SPEAKER_03 27:05

I agree. I agree. And and Lane, thank you for being here and just sharing your knowledge, sharing your time with listeners, because I always feel like you have so much to offer and so much to give. And so if they want to reach out to you because they've got financial questions or they are looking to buy a house or maybe to do a consultation, one, how do they reach out to you? And two, can they still reach out to you if they are not here locally in the Nashville area?

SPEAKER_00 27:32

Oh, absolutely. Well, the the easiest way to get a hold of me is, you know, we have a little uh I have a website and it's a launching pad. It's lanegearhart.com. It's my name.com, G-E-R-H-A-R-D-T.

SPEAKER_03 27:44

Mm-hmm. And I'll definitely put it in our notes.

SPEAKER_00 27:46

Oh, okay, great. That has my cell phone email, all that fun stuff. There's a link to apply for mortgages if you get that far. But that's the best way to reach me. Uh if I can help anyone, yeah. Well, the first thing I would say is my cell phone works anywhere at any time. So, you know, if anyone has a question or wants advice or or anything along those lines, that's free. That's easy. I can do that with anyone anywhere. When it comes to originating loans and mortgages, you know, working at a federally insured bank, I can help people get loans in 47 states.

SPEAKER_03 28:23

Okay.

SPEAKER_00 28:23

So if you live anywhere except Alaska, Hawaii, and Maryland, I don't know why, but it's Maryland, uh, I can help you get a loan. And if I can, I can find someone that will. But uh that's what I would say. We can help anyone.

SPEAKER_03 28:38

Perfect. Perfect. Well, again, thank you for your time, Lane. I really appreciate it. And for any of you listening, I highly recommend you reach out to Lane. He's a wealth of knowledge, but more importantly, just a great human being. If he can't do something for you or he doesn't feel like it is the right decision for you, he will either find the right person or be totally upfront and honest with you. And so I highly encourage you to reach out. For anybody listening, share this with somebody that you think might benefit from this episode. And we would love to connect. We would love to help you in any way that we can. And thanks so much for your time.

SPEAKER_00 29:16

Thank you for having me, Amanda. It's a pleasure.

SPEAKER_03 29:18

Same, same. And for the listeners, until next time, that's a wrap on this episode of Behind the White Coat. I hope today's conversation left you feeling more understood and supported. And if you enjoyed this episode, I would love for you to subscribe, leave a review, or share it with another physician spouse. Your support helps more of us to connect. Keep in mind this podcast is for you. So let's keep this conversation going. DM me on Instagram at Amanda Barron Realtor with your thoughts, topic ideas, questions, or even guest suggestions. I would really love to hear from you. Thanks for spending part of your day with me, and remember, you are never in this alone. See you next time.