![]() In a for sale by owner transaction, don’t give the money directly to a seller if you can help it. This is a great way to get the funds you need if you don’t have them on hand. If this is the case the lender must know so you can fill the requirements of a gift documentation request. Depending on your lender, they will have different requirements.Įarnest money can, however, be paid as a gift from a close friend or family members, such as a parent or sibling. A bank statement is a great way to prove sufficient funds. The buyer needs evidence that they have the assets to pay off their loan. It’s also essential that good faith money is not only verified but documented, so don’t pay it in cash. This proves that you are a trustworthy borrower and can be responsible for future payments. Since this is considered “good faith money” to a lender, it’s best to come up with the funds yourself. But can you borrow it while you’re waiting for financing to kick in?įirst, you should know that earnest money deposit is not typically borrowed. Since earnest money is not applied to the expected lender fees and inspections, you’ll want to save some cash for any upcoming transactions before the closing date. After all, the larger the deposit, the more “earnest” you are about the sale! Sometimes you can win a bid on a house if you give the buyer an earnest money deposit that’s larger than average. Or depending on the market, you may be asked to pay a flat fee regardless of the price. Traditionally, it totals 1-3% of a house’s listing price. An earnest money deposit is first made when a buyer wants to show their interest while seeking additional financing.
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