After you make an offer on a house and it's accepted by the seller, you'll be asked to put down an earnest money deposit to show your commitment to this purchase. But while you might be gung-ho to move ahead, the deal could still fall through if you can't get a mortgage.
Which begs the question: If financing fails to happen, do you get that earnest money back?
In most cases, yes—that is, if you take a few precautions. Premier Homes By Angela will monitor your transaction to protect you against this lost. We begin with your:
It's best to find out if you can get a loan and your loan limit before you start house hunting. We require our clients to obtain an approval and not a loan qualification, this is one stragegy that protects your earnest money.
During the approval process, our lender partner will request details about your finances—usually copies of your pay stubs, tax returns, and the like.
Getting pre-approved for a loan will help you when it comes to choosing a home that's within your price range. That way, you won't put down earnest money on a house only to find out the bank isn't willing to lend you enough to buy the place.
Another way to protect your earnest money is to include a financing contingency in your real estate contract. Basically this means that the purchase of this property depends on your getting a loan first. If a loan can't be secured, then you won't be able to buy the house and can save your earnest money.
Premier Homes By Angela will prepare the contractual contingencies that protect you and your earnest money. If there's no contingency, you are out of luck and the seller will get to keep your earnest money.
Our lender partner process includes an evaluation of the home being purchased by physical condition and on the market. If the lender's appraiser doesn't evaluate the house the worth of the home is as much as or more than the agreed-on asking price, the lender may not approve a loan that large, even though you were pre-approved.
If that happens, there are a few options: Premier Homes By Angela will negotiate with the seller in the best interest of the Buyer. The seller can lobby for another appraisal, which will could increase the amount the bank is willing to loan or a buyer can put up a larger down payment. If either option is manageable, you've saved your earnest money!
If neither option is possible and you must walk away from the deal, you may still be able to hang onto that earnest money if your financing contingency states you need a loan of a certain amount to buy the house. That way, if your loan amount falls short, you can cut your losses and keep your earnest money. We will be managing this phase to keep you unpdated on the progress.
Protecting your earnest money deposit
If your loan is large enough to cover the costs, you should be all set, right? But even with a pre-approved loan, a buyer can still be denied financing as the closing date nears, Especially if the buyer has major financial changes such as a job loss or a credit score decline or buyer makes large purchases during the offer process.
Premier Homes By Angela and out finncial partners will inform you to not make big purchases or any drastic moves that could affect your credit score between mortgage pre-approval time and the closing of the real estate deal. There will be a final credit check before closing. Sometimes clients are super excited and want to purchase funiture for the home or they are having car problems and need to purchase a new one.
That final credit check could cause financing to fall through late in the transaction. Once again, if you have a contingency in place that covers a loan falling through, you should get your earnest money back. But if the contingency isn't there, you'll lose that money.
Hire a Realtor that has experience under their belt, to ensure you are protected through the entire purchasing process.
Premier Homes By Angela awaits your call to assist you with buying or selling your home, (844) 385-SOLD. Our goal is to be your For Life REALTOR® as we assist in building the communities of Atlanta up through homeownership. We provide you with educated, knowledgeable guidance that can only be made with accurate, reliable, and projected market information. We use proven repeatable systems for client successful results. We are happy to be a trusted professional resource for you and your family. Thank you for the opportunity to provide you with this blog, we look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future. Your Dream Our Mission, we are the KEY to your real estate experience!
Premier Homes By Angela
The Key To Your Real Estate Experience
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