i have a question regarding the good faith deposit. everywhere i look it shows that your good faith deposit should be applied to your down payment at

Asked by Chanda Harris, Sycamore, IL Sun Jan 13, 2013

the time you go through with the purchase however a friend just bought a home and they were told they could not use it for their down payment and that it just got figured into the loan but they still had to pay the down payment in full seperatly. does this vary by realtor and lendor or should it always be allowed to bundle into the down payment? im in illinois if that factors in. thank you

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12
Patty Hamer, Agent, St Charles, IL
Sun Jan 13, 2013
The good faith deposit, or earnest money goes towards the purchasing of your property. To say it goes towards your down payment is perhaps over simplifying it. In most cases the buyer's only bring one check to closing. All of the buyers closing costs, downpayment and other fees are compliled, and also the seller's fees to sell (title, commissions, attorney's fee, tax prorations, etc.) are also compiled.. The title company puts all of these various amounts on the HUD1, and calculates the final amount the buyer has to bring to closing. Yes, the earnest money is in there, and it is deducted from the buyer's total. I find that buyers always need to be reassured that the money is used towards their purchase. Not every one uses the same terminology to convey this. Frankly, I think your term of bundle is pretty good. All of the moneys the buyer will owe are bundled together. The earnest money will be put towards that.
1 vote
Pinewoodsvil…, Home Buyer, Sycamore, IL
Wed Oct 26, 2016
I am so concerned for my son. He has a deposit on a good faith estimate on a property and can not come up with the total they told him for closing as a down payment. He wants out of the deal. Can he get his money back.. I was suppose to co-sign to help him as a non-occupant so he could qualify using my income and credit, however, I have not signed any agreement. Can he get his money back?
0 votes
Riccardo War…, Agent, Bolingbrook, IL
Mon Jan 14, 2013
Easy answer is it goes towards the bottom line of the money needed in order to close the transaction. Your good faith estimate will detail this so talk to your loan officer. However look at it like this. Let's say you are going to need to bring in 5k to close your loan. If you put down 2k in earnest money..... You should only need 3k at closing. Easy pleasy!

Sean Cochran
Quality Mortgage Lending
630-470-6830 office
630-330-2229 cell
0 votes
Thanks a bunch, very helpful.
Flag Thu Mar 6, 2014
Stacy Pearcy, , Sycamore, IL
Mon Jan 14, 2013
Hi Chanda,

The question regarding good faith/earnest money deposit is a good one to ask. Your friend should have received a Good Faith Estimate (GFE) from his/her lender or broker.

A GFE must include an itemized list of fees, costs, and credits (earnest money) associated with the loan. The fees included fall into six categories: Loan fees; Fees to be paid in advance; Reserves; Title charges; Government charges; Additional charges.

While the GFE is only an estimate, the final closing costs may be different; however, the difference can only be 10% of the third party fees. Once an application is completed, a GFE must be issued within 3 days and the lender/broker cannot change the fees in the origination box.

When shopping for a loan, I encourage prospective clients to request a GFE from each lender or broker that is contacted. This is a great tool to use when comparing apples to apples.

Hope to hear from you!

Kindly,

Stacy Pearcy
Mortgage Loan Consultant
THE National Bank
NMLS #895029
815-761-8788

PS. Sycamore is a wonderful community to live in! My family has lived there for four generations. : )
0 votes
Chanda Harris, Home Buyer, Sycamore, IL
Sun Jan 13, 2013
Roy paeth I looked at your website and was wondering if you could either Herr or via private email (iandpsmommy@gmail.com) let me know what the minimum credit score is to usually get preapproved from one of your lenders. I know that varies but most places have a general number. Thanks!
0 votes
Chanda Harris, Home Buyer, Sycamore, IL
Sun Jan 13, 2013
Thank you all very much I think I understand better now why myself and my friend where told differently I think it was just the wording. I appreciate the help! To Michael I am in the process of getting pre approved and once we are ready I will keep you in mind we will be buying in sycamore! Thank you
0 votes
Chandra,
Thank you! Just let me know when you are ready to move forward.
Michael Cirone
IL Managing Broker Owner
3 Roses Realty Inc
Phone (815) 690-2843
http://www.3RosesRealty.com
Email; 3RosesRealtyInc@gmail.com
Flag Sun Jan 13, 2013
ROY PAETH, Mortgage Broker Or Lender, St Charles, IL
Sun Jan 13, 2013
The good faith deposit also know as the earnest money deposit does count towards your minimum required down payment. For example if your minimum down payment was $3000 and you gave $1000 earnest money with your offer to purchase then you would still have $2000 left in order to get to your minimum required down payment.
0 votes
Elizabeth Si…, Agent, Chicago, IL
Sun Jan 13, 2013
Chandra,
A deposit is deducted from the final bottom line a buyer needs to bring to closing. Bottom line includes down payment, lender fees and transfer fees. Since down payment is required by lender, earnest money deposit can only reduce final figure and not a down payment amount.
I hope it helps.
0 votes
Michael Ciro…, Agent, Genoa, IL
Sun Jan 13, 2013
Chanda,

I'll try to clarify the earler answer with a scenario below;

$100,000 offer on a home
$1,000 Good Faith /Earnest Money
Depending on the lender, it will be used to reduce overall price to $99,000 or help in paying the
buyers closing costs necessary to close the deal. Either way, once all parties agree on terms , price ect & sign off on the final offer, the earnest money check is dropped off at lsting agents office where it goes into an escrow account specifically for that property. Either way 100% of initial deposit is used to pay down your purchase price, costs, ect.
Let me know how I can help!

Thank you!

Michael Cirone
IL Managing Broker Owner
3 Roses Realty Inc
Phone (815) 690-2843
http://www.3RosesRealty.com
Phone (815) 690-2843
0 votes
Roland Vinya…, Agent, Sprakers, NY
Sun Jan 13, 2013
We typically subtract the deposit from the amount due at the closing. In other words, the total of the deposit and the mortgages should equal the selling price. Sometimes there are closing costs which are added in the mix. Your attorney should be able to explain it thoroughly to you. If he doesn't, keep after him until you understand where every cent went.
0 votes
Chanda Harris, Home Buyer, Sycamore, IL
Sun Jan 13, 2013
Sorry I should clarify. I know it is customarily paid when you make an offer but then shouldn't it be applied to closing/down payment if you accept an offer? Or should you still have to pay 100% of your down payment and or closing costs above and beyond what you paid in "good faith deposit"
0 votes
Michael Ciro…, Agent, Genoa, IL
Sun Jan 13, 2013
Hi Ms. Harris,

The good faith deposit is usually received at the time you make an offer on a property. The money is used towards the cost of the home. buyers closing costs, ect. This shouldn't vary from Realtor or lender. It seems as if you have additional questions on the buying process and how it works.
Feel free to call or email me to discuss!

Thank you!

Michael Cirone
IL Managing Broker Owner
3 Roses Realty Inc
Phone (815) 690-2843
http://www.3RosesRealty.com
Email; 3RosesRealtyInc@gmail.com
0 votes
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