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What happens to the earnest money paid when financed with usda ?

by dawnella66899 from , South Carolina. Jan 29th 2015 Reply


Matt Elston (Matt.Elston)
#4 ranked lender in South Carolina - 50 contributions

It goes to make your loan amount smaller and or pay for a portion of your closing cost.

Jan 29th 2015
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Thanks Matt what if the seller is paying closing costs? Does it automatically get applied to the loan amount or can it be given back to the buyer?

Jan 29th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

Sometimes all or a portion of the funds can be refunded at closing. Typically a borrower will have $1000-1200 or more in money out of pocket to buy a home before closing - even with USDA or VA financing which is 100%. $500 earnest money + home inspecton + money for the appraisal most lenders will collect up-front.

Jan 29th 2015
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Thanks Matt I am all too well aware of what it means to own a home this will be my third home bought however the usda loan is new to me. It's not that it's a hardship, but the home we are buying does need some renovation so it would be good to apply it to that if at all possible.

Jan 29th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

- and that normally happens when closing costs are paid by the seller or with help from the lender.

Jan 29th 2015
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Matt Elston (Matt.Elston)
#4 ranked lender in South Carolina - 50 contributions

The underwriter would prefer to see it paying your loan down in hopes you will continue to pay your loan down. If it's a hardship that you won't get the money back I would really think hard if your ready to buy a home right now. Owning a home means lots of $500-$1,000 expenses that you don't get back immediately. USDA is a great program but every home buyer should at minimum have a $2,000- emergency savings account in the bank.

Jan 29th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

Limited needed repairs are possible to include with a USDA loan but it is unusual to do so and a more difficult approval. More normal is a FHA or conventional renovation loan - I handle all if needed

Jan 29th 2015
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Thank you Phil :)

Jan 29th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

- Sure thing! FYI, it is now possible to get a conventional loan with as little as 3% downpayment and include some needed repairs - but there is a lot more flexibility on the scope of repairs with 5% down on a conventional or a FHA 203k renovation loan.

Jan 29th 2015
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

It can be applied towards closing costs and if they are a;ready included they should be refunded to you.

Jan 29th 2015
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Linda Wintersteen (Linda123)
#62 ranked lender in Arizona - 1,256 contributions

THE earnest money if applied to the loan balance for the purchase .. ITS a good faith deposit to show that you are serious in purchasing the property.. THE escrow officer will factor the deposit into funds needed to bring to closing . linda

Jan 29th 2015
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Todd Glassman (Todd Glassman)
#1 ranked lender in South Carolina - 120 contributions

The money will go towards making your loan amount smaller and or pay for a portion of your closing cost.

Jan 29th 2015
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,722 contributions

It possible the earnest money can be refunded to you if all the costs are being paid and your within the allowable loan to value for USDA.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Jan 29th 2015
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