Real Estate Forums

Buying Questions about the buying Process..Contracts...forms or just what should I do? Let one of our experienced online real estate agents help.

Reply
 
Thread Tools Display Modes
Old 12-16-2005, 05:20 PM
TakeMeHome TakeMeHome is offline
New real estate webmaster
 
Join Date: Dec 2005
Posts: 1
TakeMeHome is on a distinguished road
Default 100% Financing and Earnest Money

If a buyer has money to cover the closing costs and has a pre-approved 100% loan, what happens to the money enclosed with the offer and how is earnest money handled?

My thoughts were that the money with the offer would go toward the closing and then any closing costs left above that amount could be "prepaid" as earnest money.

Anything above pre-paying the full estimated closing closts as earnest money would effectively be putting a down payment on the loan, right?

Also, what information should the seller be asking about the 100% loan? Should they be concerned if it is through a national bank chain? For instance, should they be asking to know the specifics of the loan program or even to talk to the loan officer about the loan?

Thanks for any insight...
Reply With Quote
Old 12-16-2005, 05:59 PM
kensmith's Avatar
kensmith kensmith is offline
Uber Real Estate Webmaster
 
Join Date: Dec 2004
Posts: 1,735
kensmith is on a distinguished road
Default Re: 100% Financing and Earnest Money

Earnest money shows up on the hud as a credit for the buyer. If it is more than they need for downpayment and closing costs then the buyer would walk out with a check.

Example: Buyer gives $5000 earnest money and they are getting 100% financing and the seller is paying all of the closing costs. The buyer would end up getting all $5000 of the earnest money back.
__________________
The Suburban House Hunters Team would like to thank REW members for past referrals! We are never to busy to handle your Chicago area referrals.

Always looking for quality unique content for our real estate agent blog, PM me if interested in writing a post.

My thoughts on the Sarasota Association of REALTORS actions.
Reply With Quote
Old 12-16-2005, 07:08 PM
kyle422's Avatar
kyle422 kyle422 is offline
Real Estate Webmaster
 
Join Date: Oct 2004
Location: Florida
Posts: 2,130
kyle422 is on a distinguished road
Default Re: 100% Financing and Earnest Money

Quote:
Originally Posted by kensmithkw
The buyer would end up getting all $5000 of the earnest money back.
I don't think that there are any lenders that would allow the buyer to walk away from a closing with money. From my experience, the money would be used towards settlement costs, which could include lender's fees, appraisal, inspections, title fees, and surveys and if anything else was left over it would go towards principle.
Reply With Quote
Old 12-17-2005, 08:10 AM
kensmith's Avatar
kensmith kensmith is offline
Uber Real Estate Webmaster
 
Join Date: Dec 2004
Posts: 1,735
kensmith is on a distinguished road
Default Re: 100% Financing and Earnest Money

If the buyer put up the $5000 they can walk away with it. Just did one like this 3 weeks ago, the example was from that deal.

The earnest money is just to make a contract legal and to show good faith to the seller. It isn't the banks money and the bank can't tell you what to do with it. If they approved a 100% loan and the sellers agreed or the lender agreed to pay all the closing costs you get your money back.
__________________
The Suburban House Hunters Team would like to thank REW members for past referrals! We are never to busy to handle your Chicago area referrals.

Always looking for quality unique content for our real estate agent blog, PM me if interested in writing a post.

My thoughts on the Sarasota Association of REALTORS actions.
Reply With Quote
Old 12-17-2005, 08:48 AM
HMiller's Avatar
HMiller HMiller is offline
Uber Real Estate Webmaster
 
Join Date: Aug 2004
Location: Hudson Valley, NY
Posts: 635
HMiller is on a distinguished road
Default Re: 100% Financing and Earnest Money

It's rare but I've recently had a client walk away from a closing with a check. The original deal included a seller's concession and the buyer was getting 95% financing. He changed the financing to 100% and between the concession and the earnest money deposit he came away with a nice little check.
Reply With Quote
Old 12-17-2005, 02:32 PM
judyo's Avatar
judyo judyo is offline
Moderator
 
Join Date: Jan 2005
Location: Oak Lawn, IL
Posts: 3,113
judyo will become famous soon enough
Default Re: 100% Financing and Earnest Money

I've also seen buyers walk away with checks at closing, and it wasn't just an "overage" check. It was because of low down financing and any credits given the buyer, including earnest money and seller concessions.

In IL buyers also get a credit for real estate property taxes as our taxes are paid a year in arrears. I'm not sure how that's handled in these kinds of situations, but a bank can only hold so much escrow so they can't take more than is legal, and if the buyer would be due a credit because of the property tax, they'd get that, too.

As far as the seller getting further information regarding the mortgage, not all mortgage companies will speak to sellers or their representatives as they are working for the buyer. So it depends on the company.
__________________
Southwest Chicago Suburbs Real Estate is an affordable area with close access to downtown Chicago. Money Magazine says that Orland Park real estate is one of the best places to live in the U.S. Next door you can find Tinley Park homes for sale and get Orland Park amenities at a more affordable price.

Last edited by judyo; 12-17-2005 at 02:34 PM.
Reply With Quote
Old 12-17-2005, 04:17 PM
kensmith's Avatar
kensmith kensmith is offline
Uber Real Estate Webmaster
 
Join Date: Dec 2004
Posts: 1,735
kensmith is on a distinguished road
Default Re: 100% Financing and Earnest Money

Quote:
Originally Posted by judyo
As far as the seller getting further information regarding the mortgage, not all mortgage companies will speak to sellers or their representatives as they are working for the buyer. So it depends on the company.
It is against the law for the Mortgage company to talk to a seller about the buyers business. The Privicy Act covers this, heck a bank will not even talk to a spouse if they aren't on the account.
__________________
The Suburban House Hunters Team would like to thank REW members for past referrals! We are never to busy to handle your Chicago area referrals.

Always looking for quality unique content for our real estate agent blog, PM me if interested in writing a post.

My thoughts on the Sarasota Association of REALTORS actions.
Reply With Quote
Old 12-18-2005, 02:06 PM
judyo's Avatar
judyo judyo is offline
Moderator
 
Join Date: Jan 2005
Location: Oak Lawn, IL
Posts: 3,113
judyo will become famous soon enough
Default Re: 100% Financing and Earnest Money

As an agent, I have had some very friendly and informative loan officers give me information relating to mortgages on my listings where I was only representing the seller. I've also had places not give me anything (usually in the form of never returning my calls), but most do share some info.
__________________
Southwest Chicago Suburbs Real Estate is an affordable area with close access to downtown Chicago. Money Magazine says that Orland Park real estate is one of the best places to live in the U.S. Next door you can find Tinley Park homes for sale and get Orland Park amenities at a more affordable price.
Reply With Quote
Reply


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



For our members

Main Sections

IDX Coverage Areas

Spiders Welcome

All times are GMT -7. The time now is 12:54 PM.


Powered by vBulletin® Version 3.7.3
Copyright ©2000 - 2008, Jelsoft Enterprises Ltd.