Seller did section 1 clearance before closing. After I got the key, I hired two other pest control companies and they found no termite evidence. I am debating if I should just tent the house for peace of mind before moving in. Thoughts?

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer if you want to check it out

Here's a post from a couple that got denied for a mortgage. I'll follow up with some math and my advice on denied applications.

>So, my wife and I found a condo we really love and decided to apply at rocket mortgage. I was told to reduce my monthly payments by $700, so basically I was told no.

>Here is my situation:

>This will be our first home. We have been renting our current residence for 3 years.

>The condo we want is asking 259k, but has been on the market a little more than a year. We imagine we can offer less.

>I make $20.10 an hour and I'm guaranteed 45 hours, but never work less than 50.

>My wife makes $18.44 at 40 hours, and had a second job at $12 an hour for 12 hours.

>I have a $508 a month car lease with 17 months left.

>My wife financed her car and has a $400 a month payment with $26k left on it.

>We have 6k left in student loans, and 5k in credit card debt. (we have reduce our total debt by 10k in the last year).

>We have been able to reduce our debt by about 1k a month.

>My parents have offered us 5k for a down payment as a gift.

>We have 2k in the bank, and about 10k in 401k's.

>We were pretty crushed when we got turned down, but maybe our attempt is laughable.

>We hate the though of losing this condo. What can we do?

>Thanks for any advice, even the brutal kind.

So i'm just going to go through the income as an underwriter would: $20.10 per hour and 40 hours per week (I know he said 45, but I can talk about overtime later) that's $20.10 x 40 x 52 / 12 = gross monthly income.

Which is $3,484

and hers is $3,196

combined is $6,680 gross monthly income.

They're paying $900 per month on cars, and maybe $100 per month on the credit card.

A mortgage payment might look like this, and I'm just guessing here, but using a 6.5% interest rate:

$1,643.38 principal and interest $200 property taxes $0 homeowners insurance (assuming HOA covers it) $117 mortgage insurance $400 HOA

That mortgage payment is $2,360

Add the $1k monthly to total debt and we're at $3,360 total monthly debts vs the $6,680 gross monthly income.

That's right at 50.2% debt to income ratio.

I mean just at a glance, it's below FHA's maximum thresholds for debt to income, so the denial might have come from possible late payments on credit.

Or maybe the condo has higher property taxes and HOA fees.

It might be more likely that the condo/HOA will not work with an FHA loan. In that case, you'd need to get DTI lower, but maybe not too much lower.

Readers will probably say "These guys shouldn't get a home"

But I didn't cover the overtime this guy makes, which sounds like it could be about 20+ hours per week.

It also depends on their lifestyle outside of the debts on credit.

Things you should review if you've been denied

There are a few things you can try before assuming homeownership is off the table.

Here's the order I'd go through:

Check your application for accuracy

A loan officer might run your file through automated underwriting, get a denial, and then tell you "your score is too low" or "you need more down payment."

But sometimes the real issue is missing or incorrect information.

Ask your loan officer for a copy of your 1003 (your mortgage application). Read through it.

Common things that get missed:

• Assets that weren't disclosed (retirement accounts, stocks, savings at another bank)
• Old debts on your credit report that should've been paid off or removed
• Double-reporting on a refinanced loan (old loan still showing, new loan also showing)

Underwriting works like a two-sided scale. Negatives on one side, positives on the other.

If your loan officer didn't list all of your assets, the scale isn't accurate. A retirement account with $40,000 in it adds significant weight to the positive side, even if you're not using it for the down payment.

Ask for a manual underwrite

Most lenders use automated underwriting because it's fast. But automated systems can spit out a denial even when you'd qualify under manual review.

Manual underwriting means a human goes through your file with a checklist instead of relying on an algorithm.

For FHA, here's what they look for on a manual underwrite:

• Cleaner housing payment history (no late rent or mortgage payments in the last 12 months)
• No major lates on installment loans in the past 2 years
• Reserves (a few months of mortgage payments saved up)
• Compensating factors like minimal payment increase from your current rent, strong residual income, or additional income that couldn't be counted

If your loan officer says "we don't do manual underwrites," that's your cue to find a different lender.

Switch to a mortgage broker

This is the move if your current lender hits you with overlays.

Overlays are extra rules a lender adds on top of the actual loan guidelines. FHA's minimum credit score is 580 with 3.5% down, but a lender might require 620. That's an overlay.

A mortgage broker represents multiple lenders. One lender might cap at 620, another at 580, another at 550. The broker shops your file to the lender that fits.

If you got denied at a bank or credit union, this alone might solve your problem.

Address the actual issue

If none of the above work, then the denial is probably real and you need to fix something.

The three most common reasons:

Debt to income ratio is too high

• Pay off a debt with 9 or fewer payments left (lenders can omit it)
• Refinance your car to lower the payment
• Add a co-borrower
• Sell something with a loan attached

Low credit score

• Pull your report at annualcreditreport.com
• Fix mistakes
• Pay down credit cards below 30% utilization
• For collections, ask for "pay-for-delete" - meaning they delete the account if you pay, not just mark it paid
• I had a surprise $100 collection drop my score 100 points. Paid it, got it deleted, score went back up

Down payment/cash to close

• Look into local down payment assistance
• Gift from family (must be documented with a gift letter)
• Sell an asset (almost anything if you can track it with a bill of sale)
• First-time buyers can pull up to $10,000 from an IRA without the 10% penalty

One thing I want to call out: if your loan officer told you "you can't qualify" and that was the end of the conversation, that's not good enough. A good loan officer tells you exactly why and what to do about it.

If yours didn't, get a second opinion.

Good luck, drop questions if you need.

Sam

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer go check it out

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer if you want to check it out

Wanted to share what a $400k home looks like across all 50 states at today's rates.

Assumptions: 5% down, 6.52% on a 30 year fixed, 0.25% mortgage insurance factor, and no other debt.

The table below includes estimates on property taxes and homeowners insurance, so the spread between states is mostly driven by those two (plus a tiny PMI difference based on the loan amount).

State	Monthly Payment
TX	$3,421
NJ	$3,416
IL	$3,384
NE	$3,338
CT	$3,324
KS	$3,248
NH	$3,221
VT	$3,211
NY	$3,188
IA	$3,168
WI	$3,148
FL	$3,139
OK	$3,136
SD	$3,124
RI	$3,121
OH	$3,114
MI	$3,108
PA	$3,074
ME	$3,023
MN	$3,021
MA	$3,018
AK	$2,971
MO	$2,971
MD	$2,958
ND	$2,954
GA	$2,951
AR	$2,941
MS	$2,941
KY	$2,931
IN	$2,911
LA	$2,911
NM	$2,911
MT	$2,908
NC	$2,891
OR	$2,888
WA	$2,874
CO	$2,869
VA	$2,868
CA	$2,861
TN	$2,851
AZ	$2,841
SC	$2,818
ID	$2,809
WY	$2,804
WV	$2,788
DE	$2,781
AL	$2,778
NV	$2,778
UT	$2,771
HI	$2,691

Texas comes in the highest at $3,421/month and Hawaii is the lowest at $2,691/month. Property taxes and insurance do a lot of the heavy lifting here.

People will also point out that you can get a bigger house for $400k in TX than Hawaii. and that's true. But this is just meant to show you what an estimated payment might be.

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer if you want to check it out

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer go check it out

I'm taking this from a higher activity sub and giving my opinion here. This is what the user posted:

>"my parents bought their 4br house for 80k in the 90s and it actually hurts"

>they keep telling me to just save up while the same house today is 650k and hasn't been updated since 1974. i make double what they made back then but i can barely afford a 1br condo with a $400 hoa fee. the math is literally broken and i'm tired of being told it's because of my coffee or netflix habits..

Let's run the numbers because the boomer comparison gets thrown around a lot and I want to actually show it.

$80,000 in 1990 with a 10% rate (average back then) and 20% down = a $562 P/I payment. Median household income in 1990 was about $29,943, so that payment was about 22% of gross monthly income.

$650,000 today with a 6.25% rate and 5% down = $3,803 P/I payment. Plus property taxes, insurance, and PMI you're easily at $4,500/month. Median income today is about $80,000, so that payment is 67% of gross monthly income.

Their payment was 22% of income. Yours would be 67%. You'd need to make about $245k to have the same ratio they did.

...and you should stop watching netflix ;)

Random thoughts: population decline won't start happening until around 2070 in the US. If no one can figure out how to make a lot of structurally sound homes at half the cost, then purchase prices will continue to rise until 2070. that's my prediction.

A bit ago I was told by an older person that us "young people move around too much" and I remember telling him that the game has changed. You have to work harder and longer to get into that house. condo -> Middle townhome -> corner townhome -> single family residence.

First time buyer share of purchases is shrinking but it's still doable.

Sam

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer go check it out

First time busying a house and its 2021 construction. It was priced around 748k and we negotiated to 736k with both agents only taking 2% commission each. Below are the details from Inspection. How much can we ask for this from seller for credits?

• Crawl space moisture/water event
• Negative grading and erosion near foundation
• Roof flashing repair
• Downspout/drainage improvements
• Kitchen exposed wiring safety item
• Fireplace gas connector correction
• Attic ducting and insulation corrections
• AC condensate drain repair

Got this from our agent:

Regarding the standing water in the crawl space, the seller did not know a drip line was not capped, therefore, it was leaking water from that vent when the sprinklers came on this spring. The sellers had a company come out and cap the line as well as remove all water. The water is also sitting on top of is a vapor barrier as well, so it cannot penetrate down onto any wood.