Jul
04
Will i get my earnest money back if financing doesnt come thorough?
By
1stimebuyer asked:
We are first time buyers. Just a couple questions about the earnest money. If by chance we dont get the loan, will we get our money back? And if the appraisal doesnt come out right will we be entitled to get our money back?
We are first time buyers. Just a couple questions about the earnest money. If by chance we dont get the loan, will we get our money back? And if the appraisal doesnt come out right will we be entitled to get our money back?
Let me read to you what our counter addendum reads: This is a nonrefundable deposit, unless buyer is unable to secure financing or if within above specified period, buyer cancels agreement in full due to findings of inspection. Said funds will be credited to buyer at closing.
Thats all the contingencies that i can find about the earnest money. So my question is if appraisal doesnt check out or we dont get financing do we get our money back. Because i see where it talks about financing, but if the appraisal is less will we still get our money back as well.
Sorry for all the questions, im totally confused on this earnest money stuff…
6 Comments
July 6th, 2009 at 12:45 am
it says in your contract that if you can’t get financing or the house fails inspection you will get your money back. now if you just decide you don’t want the house anymore and just walk away you won’t get that money back. if the appraisal doesn’t meet what you offered on the house the bank won’t finance, in which case you get your money back.
July 7th, 2009 at 7:12 pm
The first answer to your question is correct (see above.)
But why are you asking here and not your Realtor? You are a buyer, it doesn’t cost you anything to have a Realtor working for you, so you have one, right?
If not, this is a good example why anybody buying real estate should have a professional working for you. There will be much more complicated questions and problems down the road, so it’s just silly not to have a Realtor, especially if it doesn’t cost you anything!
July 9th, 2009 at 11:26 am
The way that the contract sounds you will get your money back in either of the situations that you mentioned. It might ease your mind a bit more to talk to your Realtor and have them confirm that the buyer understands that if either of those situations do not come out favorably then you are entitled to get your money back. Because even though that says that in the contract if they try to fight against you getting your money back then that can hold up your money. Try that out I think it will ease the situation for you. Hope I helped.
July 10th, 2009 at 11:39 pm
As long as you cancel your escrow before your loan contingency expires, you will receive your deposit back. Appraisal contingency has an expiration also, but it is often lumped in with the loan contingency…because if it doesn’t appraise, you won’t get the loan. If you don’t get the loan, you are covered by that contingency provided it is in effect. Some expire in a certain number of days….so read your contract carefully. I hope you have your own representation. If not, you might want to have your family attorney look at your contract. You want to pay attention to those time periods!
July 12th, 2009 at 2:10 am
The above answers are correct, but there is one thing you need to be aware of: Many states have added a financial contingency period, where if you have not exercised your option to terminate the agreement due to inability to obtain a loan by a certain date, it is assumed that your loan is approved and the ability to terminate the contract with no penalty is lost. This will be in a separate clause in the contract from the earnest money clause. PLEASE call your Realtor and ask specifically if this is possible in your situation.
July 14th, 2009 at 7:36 pm
You ABSOLUTELY DO NOT get your money back for the appraisal. An appraisal is done by a 3rd party that has no interest in the sale of the property, and that appraisal is used to determine the value & condition of the property to protect the lender AND the consumer from purchasing a loan/property that is under value or in bad condition. The appraiser is obligated to give a true market value based on comparable sales, not the value you “need” to get your loan done. If the value doesn’t come in at the purchase price, you should make the seller drop the price! Why would you want to over-pay for a property?
You CAN get your earnest money deposit back if your loan is turned down, but that is the only thing you are entitled to as far as a refund goes. That is because your purchase agreement has that contingency.