Good question! This one came up several times over the last three days. The short answer is: Yes.
The longer answer is: Yes, but not all parties view earnest money the same way.
Earnest money is “skin in the game”. It’s money the buyer puts up after contract acceptance, to be held in escrow. This money is generally returned to the buyer at closing but MAY be forfeit to the seller, in certain circumstances. Earnest money is protected by several contractual protections for a buyer in Colorado.
This isn’t legal advice, just practical information. If you’d like to talk more about housing, please call Rob Thompson @ 719-440-6626!
Always consult a CPA for financial advice and an attorney for legal advice.
Good question! Simply put, earnest money is your deposit on a home. (See: Realtor.com The Earnest Money Deposit) When you make an offer on a home, the seller will often require earnest money to ensure you are a committed borrower. This can range from $1 – 1% of the purchase price of the home. Often, you can get this money back at closing, too (though that’s subject to negotiation between you and your lender!).
Looking to buy or sell in Colorado Springs or Denver? We’d be honored to earn your business! Call 719-440-6626!
Good question! Short answer: there is no ‘catch’ but there are two expenses associated with a home purchase on a VA loan.
Longer answer: No money down specifically means nothing down against the loan on your home. There are two expenses you should be aware of, though.
First, with a signed contract, you will have to provide earnest money to the title company or designated earnest money holder. This IS money you usually get back at closing and ranges from $500-1500 (I’ve had great success negotiating $500 here in Colorado). The other expense is the home inspection; this is a “sunk cost” and runs about $250-280.
Summative answer: you CAN buy a home with a VA loan for $780-1780, most of which is usually returned to you at closing.
Questions? Looking to buy or sell in Colorado Springs? I’d be honored to earn your business!
Short answer: it’s not a downpayment (but can be used as part of it). It’s “skin in the game.”
Longer answer: earnest money is also known as “good faith money.” It’s money you as a buyer provide with an accepted offer that shows a seller you are serious about purchasing the property. You generally get this money back at closing. In Colorado, there are a number of protections for you as a buyer that enable you to get this money back if you choose to exit the contract. The seller only generally gets this money if all of your contractual protections have passed and you choose not to execute the purchase and/or something happens that affects the sale. Your buyer’s agent should keep you posted of these dates and what they mean for you and your earnest money.
Looking to buy, sell or rent a home in Colorado Springs? Call Rob at 719-440-6626 or email me at firstname.lastname@example.org!