Protect Your Deposit When Buying Real Estate
When you start the process of buying a home or any type of real estate, you'll no doubt hear the term "earnest money deposit" (EMD). So what exactly is an EMD?
An EMD becomes relevant when you are ready to make an offer on a property. In most states, your Real Estate Agent prepares the offer on your behalf. The offer usually takes the form of a written contract that is submitted to the seller by way of their agent.
In addition to the offer document, sellers typically expect an EMD. An EMD is a monetary deposit submitted via check to demonstrate to the seller that you are a serious buyer. In some regions of the country, only a photocopy of the check is submitted with the offer, and the original check is delivered to the appropriate entity if the offer is accepted. Ask your Real Estate Agent to clarify how deposits are handled in your region of the country.
The check is usually made out to an independent third- party such as a Title Company, Escrow Company, Real Estate Attorney or your Real Estate Broker. Ask your Real Estate Agent to clarify who will hold the EMD.
The amount of the EMD sellers expect varies by region. The EMD amount is based on the customs and practices for a region, but is generally from 1% to 2% of the purchase price. In a competitive market place where demand exceeds the supply of homes, some buyers may offer a higher EMD than expected to impress the seller of their intent. In determining the amount of your EMD, consult your Real Estate Agent and balance the need to demonstrate your serious intent, against the good business practice of minimizing the deposit amount.
The amount of the EMD is usually applied to reduce the purchase price of the property or to cover closing costs, as you dictate. For example, if you are purchasing a $300,000 property and you give an EMD of $3000, then the remaining balance owned at closing is $297,000 (plus closing costs). Alternatively, you may direct that the EMD be applied toward the closing costs.
Once a valid contract for purchase is created, an independent third-party usually holds the EMD until the purchase is either completed or cancelled. At this point, the money belongs jointly to both the seller and the buyer.
In cases where you make an offer that is accepted but later decide to cancel the offer, the terms specified in the contract (or state law) will dictate if, and under what circumstances, the EMD is returned to you. Be aware that you could loose your deposit if you do not not comply with the terms of your contract. Your Real Estate Agent can provide you information about how EMDs are dealt with if a contract is cancelled.
Since state law varies by region and practices can differ even within the same state, be sure to consult your Real Estate agent about the rules that apply to EMDs in your region of the country. You should also be aware that the EMD is not related to any down payment that you make toward your home loan.
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July 17th, 2009 - 18:18
What is the Key disfavors by Having Your Mortgage
realmortgagepaid.blogspot. com
July 17th, 2009 - 17:17
2-5 points
July 17th, 2009 - 17:24
Commercial loans can work several different ways……here is one way:
A developer wants to start a project, first they locate people that invest in their idea (if they can't handle the expense themselves which is where most of the money is). Then they complete the project on time and under budget. Then one of two things happens, they either run the business or they sell the project to people who knows the field of the project. They then sell space to leasers or renters. Presto, commercial lending.
July 18th, 2009 - 11:36
Most government grants are in blighted areas where they want to spur rehabilitation of neighborhood properties. As far as I know there are no federal grants avalable unless you are revitalizing a property which will end up on the national register of historic properties, but these would have little to no profit potential due to the high cost of rehab to get the property to standards. The local programs generally only give 5-20k for help in rehabbing homes, but unfortunately come with so many strings attached that you will be begging them to take their money back just so you can get them out of your hair. Once you invite them in, you many times lose the grandfather clauses on any number of code requirements that have been put in place since the particular home was built and you have to spend as much if not more than the grant money to get the place up to the government standards that they require in exchange for the grant.
In my honest opinion, better to just get your own loan and go it alone….
July 18th, 2009 - 15:07
It will try to buy a $100,000 loan for $30,000 and hopefully forclcose and sell home for $40,000.
July 19th, 2009 - 02:53
I owned a company that funded small businesses, micro-businesses, and mezzanine corporations. I searched for information on how you can start. Information is limited. I wonder why it is such a well kept secret. Possibly because there is lots of money to made financing business, but there also is a lot of risk. The only info is
http://www.businesslenders.com/why_history.htm
My advice is, unless you have unlimited financial resources, start small with micro-loans. They are easy to do and their is tremendous funding out there for companies and organizations to give consumers. Grants are available through the government for the micro-loans but only to organizations who give the loans. Banks also offer money as well as foundations.
If you have any questions contact me. I will assist you and if I do not have all the answers I will try to get them
July 19th, 2009 - 03:13
Problem #1, you didn't shop enough
Problem #2, you actually signed for the 11% loan.
Talk to your friends and family, coworkers, etc… Get referrals to people that they've done business with and would trust to do business with again.
Unfortunately, high FICO's don't directly correlate to high IQ's, so anyone can be taken advantage of, regardless of credit. Your loan officer was either incompetent, a scumbag, or both. My money is on both.
July 19th, 2009 - 07:02
Cool…I never heard of these terms before and I've been involved with real estate for over 20 years in my career. Thanks for teaching me!
Apparently this has to do with 'Settlement', not really loans or mortgages. I found this:
"…You referenced a "wet settlement." This is a term of art, which means that when a person goes to settlement, the lender's funds must be on the table.
Compare this to a "dry settlement," where there is no money available at the closing. Usually, the settlement company or attorney will complete the paperwork, send the legal documents to the lender for review, and then the lender will fund the transaction…"
Found at this site: http://realtytimes.com/rtcpages/20060529_wetsettlement.htm
Looking forward to learning more,
Elise Altergott, Principal Broker
Associate Mortgage: http://www.web-mtg.com/?src=answers
Associate Consulting: http://www.ac-fl.com/?src=answers
July 19th, 2009 - 16:32
I know several agents that are mortgage brokers and real estate agents… it is not illegal.
They can NOT force you to use them for the mortgage, and if they give you "cash back" from their commission if you use them… their could be legal issues with that.
But offering you a mortgage as well as being your REA is perfectly fine.
July 21st, 2009 - 02:19
Cash for the land. A construction laon for the building, but you are going to need to give the bank 25% in cash for the down payment on that.
July 21st, 2009 - 02:19
Your mom or dad. Better yet, kill your parents and take their house.