Happiness is finding the right home, and putting down earnest money. Eureka!  You have found the home you love so much that you put down an earnest money deposit.   Safeguard earnest money 4 important ways.

Palm State Mortgage Company will walk you through some special advice about your next steps.  These are steps to make that special Eureka home your own—or not– in today’s blog.

What Happens Next?

After your “Eureka” moment, you will make an offer on the property.  The seller accepts it, and you are delighted.  You will extend your earnest money deposit.  The money speaks your good intentions at this point, because soon there will be a contract to sign.

We need to tell you that the amount of money a buyer puts down —as well as when it must be put down—is different in every state as well as local housing markets.

Some places require 3 percent of the purchase price.  Still others might demand 10 percent.  In some small markets, there is even a “tradition” for asking for a customary small amount such as 1,000 dollars.

Because it demonstrates your good faith as a buyer, this deposit is called your “earnest money.”  The dollars literally prove you are in earnest in your effort to buy the home.  It is deposited securely.  Neither the buyer nor the seller can touch earnest money without legal written permission, while the deal is finalized.

“Once deposited, this money can’t be moved or touched without written consent from both buyer and seller.  Upon the close of escrow, the earnest money deposit is applied to the balance of the down payment.”

A very bad policy would be to put up earnest money that amounts to less than the custom in your area.  Understandably, the seller might be perturbed, to say the very least.

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Now you need to know that many things can happen from this time until the final closing of the deal.

One is that all goes smoothly.

Two means that the deal doesn’t happen, but you get the money back.

Three is the scenario you do not want.  In this situation, you lose the earnest money involved.

So, below Palm State Mortgage Company shares three ways you can safeguard your Earnest Money.

Safeguard Your Earnest Money Tip 1:  Uncovering the Secrets of the Property

Your contract should always include a “contingency” for an inspection.  Willingly buying a fixer-up is one thing, but purchasing the kind of home that becomes a “money pit,” is quite another!

To protect your money and your time involved with the deal, be sure the inspector will check the home from foundation to roof.  You want to know the secrets of the house.  Be aware of the condition of the heating and air conditioning (HVAC.)  Also check the termite policy and the swimming pool if it has one.

Safeguard Your Earnest Money Tip 2:  Deciding What Problems Are Acceptable

If problems are discovered with the home, then you must decide if they are serious enough you will want to walk away.  Some inspectors give very general commentary.

Young couple holding their new house key. They are standing in front of the home in casual clothes. Both are happy, relaxed and smiling. He has a beard and she is blonde. They could be buying or selling real estate. Copy spaceThis leaves buyers a a loophole. Some realtors call this “the “cold feet” contingency, because sometimes buyers walk after the inspection. This can happen even if there are not major issues.

Keep in mind that there will be changes you will make that won’t be that expensive over the course of time.  You would not want to lose a good deal just because you hated the color of the purple accent wall and the lime green shag rug in the living room.

Such things–and many others–can be fixed before you ever move in.  These changes can be made either at your sellers expense or your own.  Some things can be tolerated for a while after you move in, or fixed within a short time.

We hate to keep you in suspense.  We have 2 more valuable tips in store for you.  However, this topic deserves a second part and we will bring it to you next week. Thank you for reading Palm State Mortgage Company Blog.