Financing in Phoenix>Question Details

Jennifer C, Home Buyer in San Francisco, CA

If the seller is paying 3% toward closing, and I am giving a 1,000 earnest check. If the 3% covers it with some of my 1,000 will I get a

Asked by Jennifer C, San Francisco, CA Wed Feb 24, 2010

"refund" so to speak of the money that's left over?

Help the community by answering this question:


Hi AB. Your $1000 earnest money goes toward your TOTAL down payment. So, for example, let's say you have a $100,000 purchase price and your using FHA financing, which is a minimum 3.5% down payment.

You put a $1000 earnest money deposit on the offer with a 3.5% ($3500 total) down payment.

The remainder of the 3.5% down payment ($2500 total) is due at close of escrow.

Purchase price: $100,000
Earnest money: $1000
Down payment (3.5% of the purchase price): $3500
Remainder of down pmt. due at close of escrow: $2500
Loan amount: $96,500

The 3% of YOUR closing costs that the seller has agreed to pay go toward your title/escrow fees, lender fees, prorations, etc. Your lender will give you a Good Faith Estimate (GFE) that outlines these fees and exactly how much you'll need to bring to the table (IF any) AFTER the seller's 3% contribution is subtracted.

Hope that helps!

Jim Mitchell
Century 21 All Star, REALTORS
Web Reference:
0 votes Thank Flag Link Wed Feb 24, 2010
It will depend on your loan and other factors. Normally it will be applied to your down payment.

But, the fact is that the $1000 is yours and if the seller pays all the closing costs, assuming your down payment is taken care of and there are no other expenses - then yes, the $1000 will be refunded to you.

Carlos J. Ramirez, PC, ABR, CNE
Associate Broker/Realtor, HomeSmart -
2 votes Thank Flag Link Wed Feb 24, 2010
Hello AB,

This question needs to be addressed to your agent and escrow/title officer. We can hypothesize here, but we are not privy to the actual language used in your contract. Little words like, "May". "Will," "PrePaids", and "Applied To" can and do effect how monies are dispersed and used.

Please turn to the people involved in your transaction to get your answer.
Web Reference:
1 vote Thank Flag Link Wed Feb 24, 2010
Yes as long as there is an overall overage...meaning you have covered down payment,closing costs, and prepaids any extra funds wil be mailed or wired back to you.
1 vote Thank Flag Link Wed Feb 24, 2010
Your earnest deposit goes toward your down payment. Unless you're doing a USDA Rural development loan with 0% down, then you would get refunded anything you put into the transaction that was not needed for down payment or closing costs.

Brian Cardenas
President / Mortgage Consultant
Antigua Capital Funding
1 vote Thank Flag Link Wed Feb 24, 2010
Without knowing the specifics of your contract, the exact answer cannot be given, However, normally your earnest money deposit will go towards your closing costs that you are expected to pay
0 votes Thank Flag Link Mon Mar 1, 2010
Hi, AB

You can't get a refund where your required/mandatory down payment is concerned. Your down payment is what you must invest in the transaction. No exceptions. So, if seller concession exceed your necessary closing costs, that difference can't now be applied towards your required down payment as well. As a result, that unused portion goes back to the seller.
0 votes Thank Flag Link Thu Feb 25, 2010
If the sellers 3% contribution towards closing cost covers most all of the cost you should get the difference back. Any unused seller credit will not be given to you. Will you still need funds for the down payment unless you are financing 100%? The seller contribution can only be used for closing cost which does not include the down payment.
0 votes Thank Flag Link Wed Feb 24, 2010
You will need $X to bring to closing. That amount is made up of costs and your down payment. The 3% from the seller will be applied to the closing costs. Anything over that 3% will come from the money you need to bring to closing.

If the 3% is more then enough to cover the closing costs, then only the actual costs will be covered. For example is the 3% comes to $5000 and the closing costs are $4000, then that's all the seller has to pay. You won't receive the difference. It'a a credit of 3% or actual closing costs which ever is less.

If the 3% covers all the closing costs, then your $1000 will go towards the money needed for the down payment.
0 votes Thank Flag Link Wed Feb 24, 2010
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