Quote from @Matt Meier: If I were to do this, wouldn't the lender lose out on their commission? 

Sometimes its better to lose less now than more in the future.

This would be my first real estate investment, making the decision even more critical.I understand that backing out would mean losing the $2,000 earnest deposit.

Quote from @Dan Mcguire: One reason not to invest, is not to lose money.

But it is very risky and you can lose all of your properties if things go wrong.

What is the point behind having paid off real estate, if you lose it later in life to oppressive taxes?

Just to beat a dead horse, we could see a recession in the future where you and/or your spouse lose your jobs.

@Bruce Woodruff points out you can lose all your money and more. 

There is still a risk: You do not have the right outprice and lose money, your deal goes south due to unfound things when you bought it, then the rehab phase brings them up, and you spend more, and the market changes, which is something that can happen on a moment's notice.

If you are unable or unwilling to do so we may elect to terminate the lease and request a return of our deposit--which we offered in a good faith agreement that we would be presented with a habitable dwelling--and our prorated rent.