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Friday, January 29, 2010

Your Earnest Money and Contingencies

By Tara Millar

Several home buyers recognize that they need to have some cash to put down on a home but are not sure how it factors in to that equation. To help you perceive how it will be employed in your transaction, in all chance, I've answered some of the foremost commonly asked questions I have received from buyers.

Is it immediately cashed?

That really depends on the contract and also the directions it gives on how your earnest money is to be handled. Ideally your real estate broker ought to cash your earnest money check immediately to be certain the interest of all parties is treated fairly. Some states permit a buyers broker to hold the check till the deal is accepted. This offers the consumers a few extra days to iron out the supply of the earnest money if they do not have that taken cared of already.

What happens to it if I don't buy a house?

This all depends on how so much along you are within the transaction. If all of the contingencies are satisfied and you decide you do not need to purchase the house, then you should forfeit it. However, if you are within the inspection stage or at any other purpose of contingency in the transaction and, for what ever reason, you select not to purchase the house, you should expect it to be released back to you.

Does my it go toward my down payment on my house?

You can have it go toward any fees in the transaction, as well as closing costs or a down payment on your principle. Normally it goes toward a partial payment of your buyers agent fees, if your broker holds your earnest money check, in most states. Currently, if the transaction falls apart, parts of that earnest money may go to the seller, the sellers broker or your real estate broker, and you may see none of it.

Is there any way I can get it back?

Yes, you'll be able to have it refunded to you at the closing. You can additionally choose to possess it to pay for any other specific or general fee within the transaction.

Can it be used to pay other fees?

Most smart real estate brokers will collect your earnest money right up front and may even insist it is considered a "retainer" if you choose not to purchase a house after they spent a specified time with you. You will be asked to place down your earnest money before you even see one home. This money is used for deposit if you close up on a home, but may even be used as a retainer fee for the broker or the real estate agent, if you opt not to purchase a home once absorbing some of their time. Either way, your earnest money serves its function of paying for your home purchase or paying for your real estate services.

Keep in mind that some of these laws and laws that govern real estate transactions normally do change state by state, thus make sure to consult a real estate professional to determine precisely what happens in your state together with your earnest money. - 23208

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