How to Buy a House in the US, Part 4 — What Actually Decides the Outcome

[How to Buy a House in the US — The Series] Part 1: Financial Prep & Pre-Approval (link) Part 2: Finding an Agent, Setting a Budget, Searching for Homes (link) Part 3: Writing an Offer, Negotiating, and Escrow (link) Part 4: Inspection, Appraisal, and Underwriting (you are here) Part 5: Closing, Moving In, and the Full Cost Breakdown (link) ★ The Whole Process at a Glance (link)

If You're Short on Time, Here's the Bottom Line

1. Finding problems during the inspection is normal. Every home turns up something. What matters is separating the safety-and-structure items from the cosmetic ones, and negotiating accordingly.

2. When an appraisal comes in low, whether you kept your contingency changes everything about your leverage. In Part 3, a couple who waived theirs had to scramble for cash. This time, a different couple who kept theirs actually negotiated the price down.

3. Don't buy anything during underwriting. An approved loan can wobble over something as small as a furniture payment. This isn't a scare story — it's something that happens.

Let's get into it.

Before we begin: The costs and figures here are examples included to help you understand the concepts. Actual terms vary with your situation and location. The stories are drawn from real transactions, reconstructed to protect privacy.

The $32,000 Gap — What Happens When You Keep Your Contingency

In Part 3, a couple waived their appraisal contingency to win a bidding war, and when the appraisal came in low, they had to find nearly $26,000 in cash on short notice. This is the same situation with the opposite ending.

Another couple went under contract at $838,000. There was some competition, but not a five-offer bidding war, and they submitted their offer with the appraisal contingency intact. A few weeks later, the appraisal came back at $806,000 — a $32,000 gap. This is where the story diverges from Part 3.

Because the contingency was still in place, this couple had three real options: cover the gap in cash and proceed, ask the seller to drop the price to match the appraisal, or cancel and keep their deposit. The seller knew all three were on the table — including the option to walk. After some back and forth, they agreed to split the difference: the buyers covered $16,000, and the seller knocked $16,000 off the price. The final purchase price came to $822,000 — still above the appraised value, but below what they'd originally agreed to pay.

Two buyers got the same disappointing appraisal. One scrambled to find $26,000. The other negotiated the price down by $16,000. The difference wasn't luck — it was which clause was still sitting in the offer. A contingency isn't an obstacle. It's a card you get to play at the table.

Step 10. The Home Inspection — Not Because Something's Wrong, But Because Nothing's Perfect

What an Inspection Covers

A licensed home inspector examines the entire property and produces a written report, spending two to four hours on the roof, structure, electrical, plumbing, HVAC, windows, insulation, and drainage. Costs typically run $400–700 (as an example), and the buyer pays.

Everyone's Startled the First Time They Read One

An inspector I've worked with for years, who's been doing this for three decades, once told me: "Clients looking for the perfect house end up buying nothing." Inspection reports usually run dozens of pages, packed with photos, and even brand-new construction rarely comes back clean. What matters is sorting the findings into two piles.

• Safety, structural, and big-ticket items: remaining roof life, an aging electrical panel, foundation cracks, sewer line issues, active leaks

• Cosmetic and routine maintenance: re-caulking, filter replacements, a door hinge that needs adjusting

One buyer touring a 40-year-old house nearly walked away after reading a 12-page list of findings. But broken down, only two items actually mattered — an estimated 3–5 years of remaining roof life, and a small leak under the kitchen sink. Everything else was paint touch-ups and a torn screen door. They negotiated a seller credit around those two items alone, received about $6,000, and hired their own contractor after closing to handle both.

Specialized Inspections Worth Considering (Examples)

Termite inspections, sewer scope (a camera run through the line), detailed roof or HVAC inspections, mold testing, and foundation-specific inspections. Termites and aging sewer lines are common enough issues in older homes that adding these to a standard inspection is worth the modest extra cost.

When You Find a Problem — Four Options

1. Request repairs

2. Negotiate a price reduction or seller credit — many buyers prefer this, since it lets you hire your own contractor after closing

3. Proceed as-is

4. Cancel and keep your deposit, if you're still within the contingency window

In a seller's market, repair requests carry less weight. In a buyer's market, you have more room to negotiate.

Step 11. The Appraisal — Confirming What the Home Is Actually Worth

Why the Lender Requires One

To your lender, this house is the collateral behind the loan. Whatever price you agreed to, the lender won't lend more than the property is actually worth. So the loan is calculated off whichever is lower: the purchase price or the appraised value. Costs typically run $500–800 (as an example).

When the Appraisal Comes in Low — Back to the Example Above

Contract price $838,000, appraisal $806,000, a $32,000 gap. Since the lender bases the loan on the appraised value, someone has to cover that difference. As in the case above, you generally have four options:

1. Bring extra cash and proceed at the original price

2. Ask the seller to lower the price to match the appraisal

3. Split the difference (what this couple actually did)

4. Cancel and keep your deposit, if an appraisal contingency is still in place

Which of these four is available to you comes down to one thing: whether your offer still has an appraisal contingency. The Part 3 couple had only option one. This couple had all four.

Step 12. Mortgage Underwriting — What Shakes a Done Deal

What an Underwriter Does

The underwriter is the person inside the lender who makes the final call on your loan. If pre-approval was a preliminary check, underwriting is the real one — income, employment, bank statements, credit, debt, assets, and the source of your funds get verified again. If you're using gifted funds, expect to provide a gift letter and a paper trail. Any large, unexplained deposit will draw a request to document where it came from.

The Sofa That Almost Derailed a Closing

One couple, three weeks from closing on their new home, ordered a sofa and dining set for the living room on a 12-month no-interest plan. "It's interest-free," they figured. "How could that be a problem?"

The problem wasn't the interest — it was the DTI. On a monthly income of $11,200, their existing debt plus projected housing payment put their DTI around 41.3%. Add the new $310-a-month furniture payment, and it climbed to about 44.1% — enough to cross the line on some loan programs. The underwriter caught the new debt during final verification. Closing slipped by a week while the lender and the buyers sorted it out with additional paperwork. It didn't fall apart, but the couple later described that week as the longest of their lives.

Interest-free or not, what an underwriter sees is a new monthly obligation that didn't exist before. Furniture can wait until after closing is fully done.

What to Avoid During This Window

• New car loans, furniture or appliance financing, new credit cards

• Changing or leaving jobs

• Large transfers between accounts, or unexplained deposits

Requests for additional documentation are a normal part of this process — not a red flag. Submitting whatever's requested as quickly as possible is what keeps your closing date on track.

Step 13. Loan Approval — The Path to Clear to Close

From Conditional Approval to Clear to Close

Conditional Approval means "approved pending a few more documents." Clear to Close (CTC) means every condition has been met and you're cleared to close. Getting this notice means you've cleared the hardest part.

Loan Estimate vs. Closing Disclosure

The Loan Estimate is the projected cost sheet you receive early in the process. The Closing Disclosure is the final cost sheet, delivered at least three business days before closing. Compare the two side by side, and if anything shifted significantly, ask your lender to explain it before you sign anything.

Rate Locks

Mortgage rates move daily. A rate lock freezes today's rate through closing, typically for 30–60 days. As the sofa story shows, closings can slip — so building some cushion into your lock period is a reasonable precaution.

Confirming How Much Cash You'll Actually Need

The final page of your Closing Disclosure shows Cash to Close — the total you'll bring to the table. It's calculated as down payment plus closing costs, minus your earnest money deposit and any seller credit.

The Verification-Phase Checklist

• When your inspection report arrives, sort findings into "safety/structural/big-ticket" and "cosmetic"

• For an older home, discuss adding termite and sewer scope inspections

• Know your four options ahead of time in case the appraisal comes in low

• Freeze all new financing, new credit cards, and job changes during underwriting

• If a large deposit is coming, prepare documentation of its source in advance

• Compare your Loan Estimate and Closing Disclosure side by side for changes

  
  

Part 4 FAQ

Q1. What happens if the inspection turns up problems? You have four options: request repairs, negotiate a price cut or seller credit, proceed as-is, or cancel within your contingency window. As with the 40-year-old house above, focusing on safety, structural, and big-ticket items tends to be the realistic approach.

Q2. What if the appraisal comes in below the purchase price? Your lender will base the loan on the lower appraised value, so you'll need to cover the gap somehow. If you still have an appraisal contingency, as in the story above, renegotiating, splitting the difference, or canceling are all on the table. Without one, as in Part 3, you may have to cover the full gap yourself.

Q3. Can I use a credit card during underwriting? Normal, everyday spending is fine. What causes trouble is creating a new recurring monthly obligation — like the furniture financing above.

Q4. Can family abroad help with the down payment? Yes. You'll need a gift letter and a documented money trail, and international transfers can take time to verify — so start that process early rather than close to closing.

Coming Up Next

Clear to Close means you're through the hardest part — but not quite done. Part 5 covers the final walk-through, signing day, the moment you get your keys, your post-closing checklist, and a full cost breakdown with a worked example from start to finish.

Next: How to Buy a House in the US, Part 5 (link)

How Much Stuck? — The Part 4 Quiz (10 Questions)

Answers below. Get 7 or more right and you're ready for Part 5.

About the author: I'm a licensed real estate agent practicing in California. This series draws on years of working alongside first-time buyers in the field, written for readers navigating their first American home purchase.

This article is for general informational purposes only and is not legal, tax, or lending advice. All figures are illustrative examples; actual terms vary with your financial profile, loan program, state, and timing. Case details have been adjusted to protect privacy.