Do sellers of homes need a down payment if I am

[sco_101]

obtaining a mortgage from a lender who also wants money down? I am searching for a home to buy, and I see that most sellers want a down payment. If I take out a mortgage loan, won't they be paid off by it?

[crustysob]

The only circumstance where a seller would get a "down payment" is if they are actually financing the purchase. If you intend to use a lender, they may be asking for "earnest money" which is a way for the seller to determine you are serious. The earnest money will be applied to the down payment, but be certain that it is all documented in a sales contract and include any reasonable contingencies, ie an appraisal that supports sales price, obtaining satisfactory financing, mechanical and structural inspections, etc.

[sapphireskies72]

Yes, when you take out a mortgage to purchase a house, the proceeds of same go to the Seller as their profit. But, generally you only finance 80% of the asking price.

The other %20 is held in escrow by the Seller's attorney as they need money down to ensure you are not "pulling their chain" and have a point or recourse should you default under certain aspects of the signed contract.

[Yanswersmonitorsarenazis]

Any time you enter into a purchase contract to buy a home, some amount of "earnest money" paid by you is to be expected.

Basically, you're putting some cash up to show you are earnest in wanting to buy the home.

That money could be retained by the seller if you attempted to back out of your contract to buy the home. Otherwise, it's simply credited towards your downpayment and closing costs when you finally close on the home.

Some sellers might accept as little as $500, but usually it's about 1-2% of sales price.

Not that it maybe matters in the current market, but sometimes having a larger earnest money amount can make your offer look stronger in a competitive situation.

[Sandy C]

i'm not sure, but i think this site has the answer to this particular question. they've got lots of stuff about this anyway.

[Charles D]

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