If you’re buying a home, you may feel like the finish line is in sight once you’re under contract on a home. You’ve toured countless homes, made an offer, and the seller agreed to sell it to you. While you’ve gone through a lot to get where you are, the few weeks before closing on the home could produce many obstacles. Here are four problems you could encounter, according to DaveRamsey.com. 

Your lender doesn’t have your best interest in mind

If you made an offer on your home before you were pre-approved for a mortgage, your bank will now go through all of your finances to see how much they will give you. If you made an offer on a home you can afford with a down payment of 10% or more, you’ll most likely get approved for a 15 year, fixed-rate mortgage with a payment of no more than 25% of your take home pay. 

If you fall in love with a home you can’t afford, lenders will try to make it work by offering you options like adjustable-rate mortgages or piggyback loans. These can end up costing you tens of thousands more in interest and cause you to be in debt.

The best thing for you to do is get pre-approved for a mortgage (which is different than being pre-qualified) before you even look at homes. This will help you because you’ll already know what you can and can’t afford.

Your home inspection reveals costly problems

Even if you’ve been approved for a loan, the bank will still need to determine if the home you chose is a good investment. This means there must be a home inspection preformed by a licensed professional. Almost every home inspection will show that there are issues. Many are minor and can be resolved by negotiating the purchase contract terms and sometimes they can even be ignored. 

Some problems are warning signs and they should not be ignored. Termite damage or water damage could cost you thousands. Sometimes the best thing to do is to walk away from the home, no matter how much you love it.

Your new neighborhood is on the decline

The new home you are purchasing may be in a neighborhood that is completely new to you. It can be hard to get a feel for a neighborhood when you’ve only visited once. Drive through the neighborhood at different times during the day to see what it’s like. The last thing you want to do is live somewhere that makes you uncomfortable. New shopping areas and growing neighborhoods are a good sign that the neighborhood is on the rise. Also go online and search for information on the neighborhood. A good price on the home is not worth it if the neighborhood is on the decline. Always check with your real estate agent for their opinion.

The appraisal is lower than the price of the home

The appraisal can sometimes come back low because the home prices in that area are rising fast and the comparable home sales appraisers use to determine a home’s value haven’t caught up yet.

Usually a low appraisal is a sign that you are paying more than the home is worth. Your lender will not approve a loan amount for more than the appraised value of your home.

If this does happen to you, there are a few things you could do. The seller can lower their asking price (which probably will not happen), you can challenge the appraisal, cancel the contract, or you and the seller can meet in the middle with cash out-of-pocket. If you do choose the cash out-of-pocket option, be careful. Adding cash to make up for a low appraisal increases your risk because you’ll have to stay in the home longer for its value to recover.