What Is Earnest Money And How Much Is Enough? - Rocket ...

文章推薦指數: 80 %
投票人數:10人

Earnest money is put down before closing on a house to show you're serious about purchasing. It's also known as a good faith deposit. When a ... Home Learn EarnestMoney EarnestMoney:WhatIsItAndHowMuchIsEnough? KevinGraham7-minuteread November06,2021 Share: Ifyou’rereadytomakeanofferonaparticularhomeandalsowanttoshowthehomesellerthatyou’reseriousaboutyouroffer,there’sawaytoproveyourcommitment.Thisiswhereearnestmoneycomesintothepicture. We’lllookatanoverviewofwhatearnestmoneyis,howtouseittoyouradvantagewhenyoubuyahomeandhowtoprotectyourselfonceyoudepositit. WhatIsEarnestMoney? Earnestmoneyisputdownbeforeclosingonahousetoshowyou’reseriousaboutpurchasing.It’salsoknownasagoodfaithdeposit. Whenabuyerandsellerenterintoapurchaseagreement,thesellertakesthehomeoffthemarketwhilethetransactionmovesthroughtheentireprocesstoclosing.Ifthedealfallsthrough,thesellerhastorelistthehomeandstartalloveragain,whichcouldresultinabigfinancialhit. Earnestmoneyprotectsthesellerifthebuyerbacksout.It'stypicallyaround1%–3%ofthesalepriceandisheldinanescrowaccountuntilthedealiscomplete.Theexactamountdependsonwhat’scustomaryinyourmarket.Ifallgoessmoothly,theearnestmoneyisappliedtothebuyer’sdownpaymentorclosingcosts. Ifthedealfallsthroughduetoafailedhomeinspectionoranyothercontingencieslistedinthecontract(we’lllookatthosecontingenciesinabit),thebuyergetstheirearnestmoneyback.Thepracticeofdepositingearnestmoneycandecreasethelikelihoodofabuyerplacingoffersformultiplehomes,thenwalkingawayafterthesellertakesthehomeoffthemarket. Explorethemeaningofhomewithournewpodcast, Home.Made. Newepisodeseveryotherweek.Followandlistenforfreeonyourfavoritepodcastplayer. Example:EarnestMoneyInPractice Tom,MabelandIsabelleareallsellingtheirhomes.Marshallisabuyerwhohaslookedatallthreehouses.Heknowshewantsoneofthem,buthecan'tquitedecidewhichonehelikesbest.Ifallthreesellersrequireearnestmoneydeposits,therearethreescenariosthatcanplayoutwithMarshall'spurchase. SituationA:TheForfeitedDeposit Marshalldoesn'twanttodecideonasinglehousejustyet,sohemakesagoodfaithdepositonallthreehouses.Tom,MabelandIsabelletaketheirhomesoffthemarketandinformtheirotherpotentialbuyersthatMarshallwantsthehouse. Later,MarshalldecideshewantsTom'shouse.MabelandIsabellenowhavetoputtheirhomesbackonthemarketandstartlookingforbuyersalloveragain.Luckily,Marshall'searnestdepositsareMabel’sandIsabelle’stokeep.ThisoffersthemsomecompensationforthetimeandmoneytheylostduetoMarshallbackingoutofthesales. SituationB:TheEarlyClosingPayment Marshalldoesn'thavemoneytospareonmakingdepositstoallthreesellers.Aftersomeconsideration,hedecideshelikesTom'shousebestandmakesasingledeposit.Everythinggoestoplan,Marshallmovesinandthedepositgoestowardpayingoffthehouse. SituationC:TheFailedContingency MarshallmakeshissingledeposittoTom,butwhenhehasthehomeinspectiondone,hediscoversthehouseisinfestedwithcockroaches.Luckily,Marshallhasahomeinspectioncontingencyinthepurchaseagreement,sohedecidesnottobuyandgetshisdepositbackfromTom. WhyShouldYouPayEarnestMoney? Earnestmoneyisn’talwaysarequirement,butitcouldbeanecessityifyou’reshoppinginacompetitiverealestatemarket.Sellerstendtofavorthesegoodfaithdepositsbecausetheywanttoensurethatthesalewon’tfallthrough.Earnestmoneycanactasaddedinsuranceforbothpartiesinthetransaction. Earnestmoneycouldalsolowertheamountyouneedatclosingbecauseit’sapplieddirectlytoyourdownpaymentorclosingcosts.Essentially,you’rejustputtingupsomeofthemoneyearlierintheprocess. HowMuchEarnestMoneyIsEnough? Theamountofearnestmoneyyoushouldofferdependsontheparticularrealestatemarketyourdesiredpropertyisin.Alanguishingrealestatelistinginaslowmarketmaynotneedasmuchearnestmoneyasinahotmarketwithmultiplebuyerswhoarevyingforthesameproperty.Ifyouplantopurchaseinaneighborhoodwherecashoffersandbiddingwarsarecommon,ahighergoodfaithdepositisagoodidea. Ifyou’reworkingwitharealestateagent,theyshouldbeabletoprovidedirectiononhowmuchearnestmoneyyoushouldoffer.Ifyou’recompetingwithothersforthesameproperty,it’sinyourbestinterestnottoundercuttheearnestmoneydepositamountbecauseyoucouldlosethehometoastrongeroffer.Ifit’saslowormoderatemarket,youragentcanadviseyouifagoodfaithdepositinthestandardrangewillsuffice. Getapprovedtobuyahome. RocketMortgage®letsyougettohousehuntingsooner. StartMyApplication IsEarnestMoneyRefundable? Earnestmoneyhascontingenciesthatprotectboththesellerandbuyerincertainsituations. Whenyoumakeanofferonahomeandtheselleraccepts,thesaleisonlyfinalizedwhencontingencies,orcertaincriteria,aremet.They’retypicallylistedinthepurchaseagreementandcovertheinspection,appraisalandmortgageapproval,amongotheritems. HomeInspectionContingency Thehomeinspectionisacommonreasonpotentialbuyersbackawayfromadeal.Ifyourprospectivehomeisinspectedbyaprofessionalandsomeelementsofthehomecomebackinneedofrepair,ahomeinspectioncontingencycanallowyoutobackoutofthetransaction.Ifyoudon’twanttobackoutofthedeal,youcouldalsoworkwiththesellertohavetherepairsmadeorhavethemlowerthepricesoyoucandotherepairsyourself. AppraisalContingency Theappraisalcontingency,whichprotectsthebuyerifthepropertyisovervalued,isequallyimportant.Thelenderhiresathird-partyappraisertodeterminethefairmarketvalueofthehomeandtocompareittosimilarpropertiesforsale.Withthiscontingency,ifthehomeisappraisedatlessthanthesaleprice,youcanchoosenottomoveforwardwiththedealandyou’llgetyourearnestmoneyback.Alternatively,youcanusetheappraisaltonegotiateanewprice. FinancingContingency Ifyouweren’tpreapprovedforamortgagewhenyouputyourearnestmoneydepositdown–orevenifyouwere–andthenyoudon’tgetapproved,amortgagecontingencycanprotectyou.Youhavetherighttowalkawayandgetyourearnestmoneybackaslongasthiscontingencywaslistedintheagreement. Applyformortgageapprovaltoseeyouroptionsandgetabetterideaofhowmuchhomeyoucanafford. ContingencyForSellingAnExistingHome Somecontractsalsoincludeacontingencyforsellingyourexistinghome.Ifyoucan’tsellthehomeyoucurrentlyownbeforeyoucloseonanotherhome,thiscontingencyletsyoubackoutofthedealwithyourearnestmoneyinhand. WhenToWaiveAContingency Inhotrealestatemarkets,somebuyersfeelpressuretowaivecontingencies;forinstance,theymayconsiderthisifthey’reabsolutelycertainthey’llqualifyforamortgage.However,it’sneveragoodideatowaivetheappraisalorinspectioncontingencies.Thosecontingenciesaretheretoprotectyou. HowtoProtectYourEarnestDeposit Thereareafewstepsyoucantaketoprotectyourearnestmoney: Step1.UseAnEscrowAccount Therealestatemarketisn’timmunetofraud.Asaresult,youshouldnevergiveyourearnestmoneydirectlytothesellerorarealestatebrokerage.Instead,gowithathirdpartysuchasatitleorescrowcompany,whichwillholdyourearnestmoneyforyou. You’llusuallypaybycertifiedcheck,wiretransferorpersonalcheck.Yourcheckshouldbemadeouttothatthirdparty,andyoucankeepacopyofthecheckandrequestareceipt.Thefundsarethenheldintheescrowaccountuntilclosing. Step2.KnowYourContingencies Contingenciesprotectboththesellerandbuyerandgivebothpartiesthemeanstobackoutofthedeal.Toensureyoumeetyoursideofthecontract,makesureyouunderstandyourcontingenciesandpaycloseattentiontothefineprint. Youshouldunderstandeveryscenariowhereyouandthesellercanbackoutandwhatimpactthatwouldhaveonyourearnestmoney.Besureyou’recomfortablewiththecontingenciesandareconfidentanyactionsyoutakewon’tresultinyoulosingyourgoodfaithdeposit. Step3.StayOnTrackWithYourResponsibilities Toprotecttheseller,thepurchaseagreementwilltypicallyincludeatimelineforwheneveryaspectoftheprocesshastobemet,suchasthedatebywhichyouneedaninspectiondoneorwhenthemortgageshouldbeapproved. Ifyoumissthosedeadlines,therecouldbegroundsforthesellertobackoutofthedealwithyourearnestmoneyinhand.Mostsellerswon’trescindthedealtheminuteyoumissadeadline,butifyoutaketoolong,itcouldbeadealbreaker. Step4.PutItAllInWriting Ahomeisoneofthelargestpurchasesmanyofuswillmake.It'simportanttoprotectyourinvestmentsalongtheway,whichiswhyyoushouldputeverythinginwriting.Thisincludesanychangestothetimelineandbuyerresponsibilities.Makesurethepurchaseagreementlaysoutwhogetstheearnestmoneyifthecontractiscanceled. Forinstance,iftheinspectionfailsandthebuyerwillgettokeeptheearnestmoney,statethatinthecontract.Ifthebuyerhasachangeofheartandthesellerwillkeeptheearnestmoney,laythatoutaswell.Everythingshouldbeexplainedindetailinthecontract. Summary Earnestmoneymayseemlikejustanotherout-of-pocketcostyouhavetocoverduringthehomebuyingprocess,butit'sextremelyimportant.Itprotectsyouifsomethingiswrongwiththeproperty,protectsthesellerifyousimplywantoutofthedealandprovestothesellerthatyou’reseriousaboutyouroffer. Ifyou’rereadytomoveforwardwithbuyingahome,youcangetstartedonline. Getapprovedtobuyahome. RocketMortgage®letsyougettohousehuntingsooner. StartMyApplication SeeWhatYouQualifyFor KevinGraham KevinGrahamisaSeniorBlogWriterforRocketCompanies.Hespecializesineconomics,mortgagequalificationandpersonalfinancetopics.Assomeonewithcerebralpalsyspasticquadriplegiathatrequirestheuseofawheelchair,healsotakesonarticlesaroundmodifyingyourhomeforphysicalchallengesandsmarthometech.KevinhasaBAinJournalismfromOaklandUniversity.PriortojoiningRocketMortgage,hefreelancedforvariousnewspapersintheMetroDetroitarea. RelatedResources ClosingCosts:WhatAreThey,AndHowMuchWillYouPay? MortgageBasics-13-minuteread VictoriaAraj-November20,2021 Itcanbetrickytosortthroughclosingcosts,sowebrokedownwhattheyare,howmuchtheycost,who’sresponsible,andhowtominimizeyourexpenses. ReadMore DownPayment:WhatIsItAndHowDoesItWork? HomeBuying-5-minuteread VictoriaAraj-November03,2021 Adownpaymentisapercentageofthepurchasepricethatyoupayoutofpocket.Learnhowtheyworkandhowmuchyoushouldputdownonahouse. ReadMore



請為這篇文章評分?