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As buyers gear up for the summer home buying season, questions regarding the earnest money deposit always pop up. Here are 7 tips for 2018 homebuyers regarding earnest money deposits.
- How much should you offer? It depends on what is typical for your area. Keep in mind that a check for $10 may indicate to the seller that you are not serious.
- Earnest money deposit is part of the down payment and should be considered a show of good faith.
- The Ernest money should only be given to a reputable Realtor that you have a relationship with or a verified company involved in the transaction.
- Can the earnest money deposit be forfeited? Yes, that is why it is very important to have a good purchase agreement with specific targets that spell out when and how the buyer can stop the transaction.
- Money orders should be avoided. There needs to be a clear documented trail of the funds coming from the buyers account to the funds used for the earnest money deposit. (All bank deposits other than payroll deposits need to be documented for the account that the earnest money check will be drawn from.)
- If the Earnest money deposit check is coming from a family member that is NOT purchasing the property (signing the purchase agreement), consult with your mortgage 1 loan professional with regards to proper gift documentation….
- Make a copy of the check before you present it, for your records.
Submitting an offer on a dream home can be an exhilarating feeling. It is important to correctly handle the earnest money deposit and to properly document it to make the entire transaction seamless. Follow the 7 tips and get the moving truck ready! If you would like to start the mortgage process now try our digital application called SNAP Mortgage!