Non Qualified Mortgage

Does Earnest Money Count Towards Down Payment

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Will my earnest money count toward my down payment? Do I always get my earnest money back if I don’t purchase the home? What other expenses will I have to incur in addition to what is on the closing cost estimates provided by my loan originator?

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If the deal successfully completes, the earnest money will go toward your down payment. When you deposit earnest money, it is held in an escrow account with the seller’s broker, title company, or escrow company. Some prefer to make small down payments instead. Low-down-payment loans also allow cash gifts for down payment.

If the seller accepts your offer, this money will go toward your down payment and closing costs. Note that earnest money can be either refundable (this is almost always the case) or non-refundable.

Earnest money is not a down payment, however. It just signals your intent to purchase and gets the ball rolling. No matter how much you pay, you won’t give your money directly to the seller. You.

Your 00 earnest money goes toward your TOTAL down payment. So, for example, let’s say you have a $100,000 purchase price and your using FHA financing, which is a minimum 3.5% down payment. You put a $1000 earnest money deposit on the offer with a 3.5% ($3500 total) down payment.

If the deal is successful, the earnest money deposit is released and included as part of the down payment. The earnest money deposit can easily require you to contribute several thousand dollars.

You will also need to show your lender that the earnest money check has cleared your bank. This money will be held until closing, and then credited toward the Buyer’s down payment. You need to be.

If it does, the earnest money you paid gets released from escrow and is used to help pay your closing costs. If you prefer, the money can instead go toward your down payment or you may have it.

Earnest Money is a Deposit you put down on a property to show consideration (required in some states to make a contract valid). It has nothing to do with the Down-payment (although it could go towards your down-payment). The Earnest Money is to show the sellers that you are serious about buying their property.

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