Financing contingencies and earnest money in New Hampshire

What is earnest money?

Earnest money is the good-faith deposit you make when your offer is accepted. It's usually held in an escrow accountEscrow account An account your loan servicer uses to collect and pay your property taxes and homeowners insurance as part of your monthly payment. See the full glossary× by the real estate brokerage, a closing attorney or a title company, not paid straight to the seller. At closing it counts toward your down payment and closing costs.

Whether you get it back if the sale falls through depends on the agreement. Contingencies are what protect it: if a condition in the contract isn't met and you give notice on time, the deposit is typically returned. Walk away for a reason the contract doesn't cover, or miss a deadline, and you could lose it.

Lenders also want to see where the deposit came from, so pay it from your own account and keep the statement.

What is a financing contingency?

A financing contingency, also called a mortgage contingency, makes the purchase depend on your getting the loan described in the agreement. It usually sets out the type of loan and a date by which you need a written loan commitment. If you can't get the financing and you notify the seller in writing by that date, you can usually cancel and get your deposit back.

Agreements differ, so read yours with your agent or a New Hampshire real estate attorney and send Tom a copy as soon as it's signed so the loan timeline matches its dates.

What is a loan commitment letter?

A commitment letter is the lender's written approval after underwritingUnderwriting The lender's review of your full application to confirm the loan meets its guidelines. See the full glossary× has reviewed your file. It's stronger than a pre-approval, but it usually lists conditions that must be met before closing, such as a final pay stub, an updated bank statement, the appraisal or proof of insurance.

To get it in time: apply right after your offer is accepted, send documents quickly, and keep your finances steady. The after-you-apply guide covers what underwriting looks at, and the closing timeline planner lays out the dates.

How do the appraisal and inspection fit in?

The lender orders the appraisal, and if it comes in below the price, the loan amount can change. Some agreements tie this to the financing contingency and some add a separate appraisal contingency. The low appraisal guide covers your options.

The home inspection usually has its own, earlier deadline. In New Hampshire it often includes radon and well water tests; see the inspection guide.

How do I make sure I meet the deadlines?

• Put every contract date on one calendar: inspection, financing, appraisal and closing.
• Lock your rate or decide when you will; see the rate lock guide.
• Answer document requests the same day when you can.
• If a date is at risk, ask your agent about a written extension before it passes, not after.
• Send any notice in writing, the way the agreement requires.

Should I waive the financing contingency?

Some buyers waive it to make an offer stronger in a competitive market. That puts your deposit at risk if the loan falls through for any reason. If you're considering it, talk with Tom first: a full review of your income, assets and credit before the offer, and an early appraisal plan, lower the risk but don't remove it.

A strong, verified pre-approval is often a safer way to stand out; see the pre-approval guide.