A good faith deposit usually goes into a trust or escrow account held jointly by the seller and the buyer. Sound like a commitment?

The Facts about Earnest Money Deposits | pezewehemave.web.fc2.com

Earnest money is not an additional cost or money down the drain. Think of your good faith deposit as an advance on the sale. If the sale goes through as planned, your good faith deposit will fold into your down payment.

How to Protect Your Earnest Money Deposit

And putting earnest money on the table can give you a little breathing room to finish getting your financing in order. Sellers rarely accept offers without a good faith deposit. While that sounds great for buyers, that would essentially take the home off the market while the buyers debated the merits of the home—not feasible for a seller who needs to attract interest and offers.

And just like a larger-than-expected offer, a large good faith deposit can sometimes tip the odds in your favor if your seller is seeing a lot of interest in their home. Your lender may want to verify the source of your earnest money.

How to Protect Your Earnest Money Deposit

Lenders want to know that this money really does belong to you and accurately represents your ability to fund a home purchase. You should be able to show that the money has been in your accounts for at least 60 days. When a sale falls through, you may or may not get your good faith deposit back. You will usually get your deposit back if your lender declines your financing or if the home inspection turns up any problems.

A nominal cancellation fee is usually deducted in either case.

Never give your good faith money directly to a seller. Make sure your money is going into an escrow account and that the firm or broker handling it is properly credentialed.

Ready to buy the home of your dreams? Line up your financing beforehand. PenFed offers a full range of mortgage options to help you turn that new house into your home. You could save substantially when you use PenFed to buy a home. Find out more here.

The Day - How much of an earnest money deposit should you make? - News from southeastern Connecticut

This is a moderated blog; all content will be reviewed before posting and is considered accurate as of the date posted. Views and opinions expressed in comments are for informational purposes only and do not constitute official endorsement by PenFed.

The content found on this blog is for informational purposes only and should not be used as tax or investment advice. PenFed encourages you to seek a professional when making investment or tax decisions. PENFED HOME CONTACT PENFED. When Is The Right Time To Dip Into Your Emergency Fund?