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In what situations that a downpayment for mortage is not refundable?
For example, I am buying a house for $ 500K. I am putting down $ 300K as downpayment. I am going to take a loan for $ 200K. If I fail to get a loan approval from the bank or somehow a deal with the seller fails, would my downpayment be lost. That’s, I would not get my downpayment back?

5 Thoughts on downpayment for mortgage?
  1. Reply
    jondjulius
    February 15, 2014 at 8:51 pm

    Typically, you wouldn’t pay this amount until you close and the title gets put into your name, which then the seller could no longer back out. Just don’t give the seller any money until the deed of the property is put into your name! Also, make sure your bank approves your loan before you purchase.

  2. Reply
    xchasingsummerx
    February 15, 2014 at 9:41 pm

    Lol, you don’t put a downpayment without being approved for the loan first….

  3. Reply
    Lynn
    February 15, 2014 at 10:21 pm

    That is an excessive amount to put down as an earnest money deposit. It usually is about 3%. You need to check the contract as to what would make the earnest money deposit non-refundable. You can always add an addendum to the contract to spell out in what situations you want your money back. It is best to check with your realtor. If this is a private sale, you should see a real estate attorney.

  4. Reply
    plasma71104
    February 15, 2014 at 10:57 pm

    You need to have a loan before you can put a down payment. You can’t lose a down payment.

    Your question sounds like you are talking about an escrow payment (or earnest money) because you can lose that if certain things happen. Generally an earnest money can range anywhere from 1% to 5%. If you have a financial contineugency in your contract you will have to show good faith in securing a loan. If you just sit on your butt and waste time then you will lose it. If the seller fails to perform you are entitled to your deposit or sue for specific performance.

  5. Reply
    Expert Realtor
    February 15, 2014 at 11:30 pm

    Ok…so far no one has answered your question correctly.

    You are confusing Down payment with earnest money.

    1. Earnest Money.

    This is money you pay at the time the contract is signed. It should not be more than 1% of the total loan amount. This is money given in good faith and kept in a trust or escrow account…and the check is NOT cashed until your sales contract has been accepted by the seller.

    When there is a legal “meeting of the minds”, as long as you purchase the home, the earnest money will be applied TOWARD your down payment as well.

    If you breach the contract, then the sellers keep the earnest money as liquidated damages (but reserve the right to sue for more, if applicable).

    If the sellers cannot meet the agreed upon terms of the contract, then you are entitled to a refund in full.

    2. Down payment

    This is probably the $ 300K that you are talking about. This is what you discuss with the BANK that you are getting the loan through and is never paid until your loan is 100% approved and you go to close on your home, and you pay it that same day…therefore, you keep it until the day you take possession of the house.

    The bank will require you to prove where the funds are coming from.

    Hope that helps.

    PS: To those posters that keep talking about “escrow accounts” and “closing of escrow”…know that only 4 states in the USA are “escrow states” and everyone else uses a trust account to keep earnest money in and with us, there is no such thing as “closing of escrow” b/c it doesn’t exist.

    So if the OP doesn’t live in one of those 4 states, he isn’t going to have a clue as to what you are talking about.

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