I am planning on purchasing a house soon and will be putting a 40% down payment towards the purchase. My question is when I sign the contract with the attorney, is the full 40% down payment given at that time, or at the time of closing? Is is customary to put a smaller amount at the time the contract is signed, and the remainder at the closing? It is my understanding that the amount given at the time of contract can be lost if the deal falls through...?
2007-10-22 01:53:11 · 6 answers · asked by CJ 1 in Business & Finance ➔ Renting & Real Estate
Earnest money at contract signing. Put down as little as the seller is willing to accept because it keeps your money with you (your realtor will guide you to local custom, but I would expect about $500 at a minimum and 1% as a maximum). You don't generally sign a purchase offer with an attorney, it is usually with a realtor.
Small amount at contract signing, as much as you want at closing.
The amount you put forth at the contract signing can be lost if the deal falls through because you change your mind or walk away. Put contingencies in the contract around financing, around the home inspection and around whatever else strikes your fancy. The contract is a back and forth negotiation!!
Good luck!
2007-10-22 03:01:13 · answer #1 · answered by Rush is a band 7 · 0⤊ 0⤋
You do give a good faith payment when you sign the contract, but that is usually just $1000 -$2000 depending on the contract price. This amount is returned to you if the contract is not accepted by the seller. If the seller accepts your contract then the good faith payment is credited toward your total down payment at closing. Enjoy your new home!
2007-10-22 01:57:40 · answer #2 · answered by Beauty2020 2 · 1⤊ 0⤋
When you tender your offer you'll typically include earnest money of around $500 to $1,000 unless the property is very expensive. Normally you would put up less than 1% for earnest money with the offer. The balance of the down payment will be collected by the closing agent at closing.
If you back out of a deal for a reason other than the ones included in the contingency clauses in your offer you will generally lose your earnest money so you want to keep that as small as possible.
2007-10-22 02:00:08 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
I would place enough money for the closing costs probably 3% and no you never loose your deposit unless you leave the closing table with no reason at all and even then the seller has no recourse for keeping your money and it never goes to the seller anyway It goes in an escrow account and stais there as a good faith payment.
2007-10-22 02:13:32 · answer #4 · answered by Fabio G 3 · 0⤊ 1⤋
No, don't tie up so much money when you sign the contract. For your Earnest Money Deposit I would give no more than 5%. It's more than enough to show your seller you are serious. The more competition you have for this house, the bigger EMD you should be willing to give. No competition? then only give $5,000 total. http://www.frederick-county-homes.net/
2007-10-22 03:22:59 · answer #5 · answered by Anonymous · 0⤊ 0⤋
What you are comfortable with and that would ease the seller. That everyone is happy.
Mark B
2007-10-22 03:42:44 · answer #6 · answered by Anonymous · 0⤊ 0⤋