hello all,
i think i’m finally ready to make some deals but i’m not sure about how the earnest money deposit works. how do i structure my contracts for no money down?
do any one have a contract that reflects such a deal that i may look at to get some ideas about how to do mine.
Are you using a Realtor? It sounds like you’re not, but I wanted to ask.
If you’re using a realtor, you’ll give the earnest money to the Realtor and it will be credited toward the purchase at closing.
If you’re doing this on your own, you can have a title company do your closing for you. They can handle your paperwork and they will hold the earnest money in an account until closing.
If you’re looking for no money down, you can ask the seller to carry back part of the purchase price on a note. The bank mortgage will cover the rest.
Most (if not all at this point) banks will require you to have at least some of your own money in the deal for an investment property. Their reasoning is that if you don’t care about your credit and you run into financial difficulty, the investment property is probably one of the first things you’ll walk away from. Having multiple thousands of your own dollars in the deal as a down payment gives you a vested interest in not defaulting on the mortgage.
You can also try a private lender for the down payment too. If you have any other properties, you could also cross collateralize your property on the new one, but you’re putting your existing property at risk too if you default.
I’m sure there are some other ways someone on here can share. These are just a few situations that came to mind.
Just make your earnest money $10, enough for consideration. It will fly if you act confident. No money down really means no down down payment (i.e. 5%, 10%, etc).