I consider it to be one of the single biggest red flags in a potential customer.

(After all, it has been three months and the market is red hot and appreciating, and they are owed $200k and counting on the mortgage!).

I mean red ink saying " hey I loved the dress you were wearing after you came out of the shower...OK OK OK.. maybe that is a leeeel bit exaggerated.. but my point remains.Just say what you need to say.

Refinance into a conventional mortgage (Variable down, Interest rates up to 10%, harder to qualify for, lots of red tape) for a percentage of the ARV, the difference between the total cost for the HML and the dollar amount that percentage represents is what you get back in cash.

Just like a bad tenant who raises red flags, you want to deal with those immediately before things progressively get worse.

But the problem was solved and I was able to move on with my plans for the property.See what the true root of the problem is and see if you can help fix it.

I've never bought a house before, and i've never had an income to be able to be picky about my living situation, so i really have no idea what amenities to look for, and even worse, no idea what large ticket items to look for. obviously roof, foundation, electrical, plumbing - but what indicators of those can i actually inspect on my own and be able to see if this house has any major red flags? 

It doesn't seem like you're in a position to shop, so just something to keep in mind for future reference.Also, when you're talking about a 30-year fixed loan, if one lender tells you they can do something that several others said they cannot...it's a huge red flag.  

@David Dachtera  first course of action is to simply and I say very simply.. go to the county or city .. talk with the planning department.. and make sure the lots were recorded as final plats.. and are legal lots of record. just because utls are in does not mean the plat was recorded.then see if there are any other red flags.. then go to public works ask the same questions.then go to the building department and make sure they don't have them flagged.

I was required to fax in:Copy of my Drivers LicenseCopy of my Social Security CardNOTARIZED water service applicationSigned copy of settlement statement from title companyThis seems like a ridiculous amount of red-tape required to set up water and trash service with the city of Dallas.