Funding “Earnest Money” 

• Earnest money is an important part of your real estate transaction and tells the seller that you are serious about purchasing their property and essentially give you some “skin in the game.”  There are several times throughout the contract process when you can exit the transaction (typically at inspection and financing deadlines) and preserve your earnest money deposit but if those are not utilized then any other reasons for exiting the contract will typically cause you to forfeit your earnest money. In your contract you included a figure of how much your earnest money deposit would be (typically 1-2% of the total home purchase price.)  Once your offer is accepted it is your responsibility to transfer the funds to the Title Company where it will be held in the escrow account and eventually credited towards the sale.  

Home Inspection

• After transferring your earnest money deposit the next step is to schedule a home inspection with an independent, licensed and insured inspector to go through the property to look for potential future repairs, maintenance issues or unknown deferred maintenance that the seller has not disclosed.  Make sure to join the inspector at the inspection and ask a lot of questions.  After the inspection we will negotiate on your behalf with the seller for repairs and/or cash credits at closing.  If we are unable to agree on terms to address the inspection items with the seller, this is typically one of your chances to terminate the contract while still retaining your earnest money deposit.  

Mortgage Financing

• Shortly after contracts are signed your lender will order an appraisal on the home to get a professional opinion on how much the home is worth and what they will lend you on that particular home.  They will also ask for any additional information they need to get your loan formalized by the lender.  Once that happens you will receive documents that outline exactly how much they will lend you, what your interest rate, points and loan terms will be.  If for some reason you are unable to secure financing that is satisfactory, or the appraised value comes in under the contracted price these are the two other deadlines when you can retain your earnest money deposit.   

Homeowners Insurance

• You will need to get with an insurance agent to discuss and secure the proper type and amount of insurance that you will need.  This is especially true if you are paying cash as you don’t have the bank personnel to double check that you are properly insuring yourself.  Your mortgage lender will require you to provide them documentation of this coverage prior to the property insurance deadline.   

Closing The Transaction

• Once we have met all of the deadlines and as we arrive at your closing date, you will be ready to sign documents, fund the down payment and verify the lender costs match the Closing Disclosure that you will receive at least three business days prior to the closing.  Make sure to read and review all these documents before you sign off that they are acceptable to you.  Your lender will transfer the funds to the escrow company who will finalize all the paperwork and you are now the proud owner of your new home!