All Forum Posts by: Gloria Mirza

Do not give up a fixed rate loan, rates are currently at historical lows.  Mortgage rates closely follow the 10 year treasury note.  When the T-note rate goes up, so do mortgage rates.  Right now rates are at a an all time low.  Here is a chart that shows the historical rate on a 10 year T-Note https://finance.yahoo.com/echarts?s=%5ETNX+Interac....

Even if you pay a higher rate right now it is worth it.  

HI Corwin,

My best advice to you would be to save a 3.5% down payment and buy a house.  Owning a house helps you get your foot in the door.  Once it appreciates you can then get a home equity loan and use that as a down payment for your next home.  

You can even buy a 4 plex, live in one unit and rent out the other 3, all with a low downpayment FHA loan.

Thank you, that was very helpful!

As far as neighborhoods, most of the homes in the 95206 and 95207 areas of stockton are in nice neighborhoods.  The 95204 and 95203 also have some pockets of good neighborhoods.  My rule of thumb for investing in Stockton is to do a google street view and avoid areas where the homes have a fence in the front yard.  It sounds silly, but it's actually a good indicator of the neighborhood.  

@Leslie B. Pros of Stockton are that the local market is still very depressed from the housing crash. I believe that once the backlog of distressed properties is cleared out there will be more upward pressure on home prices from bay area transplants moving to the area.  Prices in the bay area are not affordable for a lot of people where as you can still buy a nice house in Stockton for 250k.

The one bad thing about Stockton is that there is a lot of crime, even in good neighborhoods.

Hi Thor,

I practice as an agent in San Jose but am actively investing in Stockton and Elk Grove for my personal portfolio.  I own two rentals in Stockton and working on a third.  If you're interested, send me a message and I will give you my number so we can chat.

I understand the distinction between expenses and debt, I'm just not sure how Fannie Mae calculates DTI. Are you saying that expenses are not considered when calculating DTI?

So they do not consider maintenance cost on a rental as part of your monthly debt? What about transportation expenses for visiting rental properties. They are considered as expenses when doing taxes so I'm wondering if they count towards your liabilities when calculating DTI.

I'm trying to calculate my debt to income ratio so that I can see how many properties I can qualify for under a conventional loan. I understand the basics that Principal, Interest, Taxes and Insurance (PITI) all count as debt. Depreciation on tax returns if factored out and does not count as debt. Also, income is the 2 year average of what I claim on my tax returns for properties I have 2 years of return or 75% of the lease rent if I do not have 2 years of returns.

My question relates to everything else:

1.) What about "one time" maintenance expenses that I list on my tax returns?

2.) What about things like a new roof or a fridge that need to be depreciated over multiple years?

3.) What about points paid upfront on a loan that need to be depreciated over 25 years?

@Kelli Huang you should shop around for a better lender. I would recommend some lenders but I think there are rules against that on this board. Typically you will pay around $1600 in lender fees. It shouldn't take you too long to make up the upfront cost with the money you save from PMI.

Did home prices go up in the last 4 years? If your home is worth 20% more after appreciation due to market conditions plus your renovations, then you should be able to get a conventional loan without putting any money in. You should also be able to get rid of your PMI even without doing a refi, if you think it will appraise for 20% more than what you paid 4 years ago.