Dave Ramsey Says These Are Some of the Biggest Red Flags in a Home Inspection. Is He Right?

A home inspection is an important part of the buying process.

If you are buying a home, you need to make sure the property is in good condition. The last thing you want is to get a mortgage loan and spend good money on a home, only to find out that it's in need of serious repairs that will cost you a fortune.

In order to make sure you don't face costly unexpected surprises, you'll typically make your offer to buy a property contingent on (or conditional upon) a successful home inspection. This involves a professional coming to look at the property and identify any issues.

It can be hard to know exactly what to worry about in an inspection, but finance expert Dave Ramsey has outlined a few key red flags that you should be aware of.

These inspection issues are bad news

According to Ramsey, these are some of the biggest red flags that you should be on the lookout for when a home you're thinking about buying is being is inspected.

• Old electrical wiring: Ramsey warned you should be alert to things like overloaded outlets or panels wired with too many circuits. For older homes, especially, he said to be careful of aluminum wiring. "It's a fire hazard because it tends to overheat at connections," he explained.
• Damage to the foundation: While Ramsey said all homes settle, he warned that you should "watch out for bulging or bowing foundation walls, which is a sign of structural weakness that can be expensive to repair."
• Septic tank problems: Some homes come with septic tanks if there isn't a connection to the public sewer. Ramsey said slow drains, standing water, and bad smells are signs of a septic problem that could cost thousands of dollars to fix.
• Water leaks: Any type of leak, whether it's from a roofing problem or drainage issues, can be very expensive to correct. Ramsey said inspectors should absolutely be on the close lookout for active leaks that you may have to pay to repair.
• Mold: Although Ramsey said that it's not a huge deal to clean up small areas of mold affecting under 10 square feet, a larger intrusion of mold can be a much bigger problem. "Extensive growth requires professional help," he warned. "The cost of removing mold from crawl spaces, walls and ducts can easily be thousands of dollars, depending on the scope of the damage."

Is Ramsey right about these red flags?

It's a good idea to heed Ramsey's advice about these major issues that could affect a home purchase. You don't necessarily need to walk away from the sale if they are identified, but you must investigate further.

In many cases, you can ask the seller to correct the issues before you buy or can ask for a credit to fix the problems yourself. The latter may be a better option since you don't want the seller to just do cheap repairs to get the sale done. Be sure you have accurate quotes before moving forward, though, and that you're OK with having to complete some work before moving in.