Q: What happens to my binder deposit (earnest money) if I don't get approved for the mortgage?
A: One of the clauses in the Northeast Florida purchase and sale agreement provides for return of the buyer’s binder deposit if they are not approved for a loan within the timeframe. In most cases, this timeframe is 30 days from the date the contract is signed by all parties.
For example, if the contract is signed and accepted on March 1, you have until March 31 to get your loan approved. If you are not approved within that timeframe, the buyer gets their binder back. If any repairs have been done by the seller, or any closing services completed (appraisal, survey etc) those are paid for out of the binder and then the buyer gets the remainder.
If the earnest money was $1000, and the appraisal had already been done before the buyer finds out they are not approved, the buyer would get about $550 back, based on a $450 appraisal price.
This is why communicating with your lender and being proactive about getting the loan processed is so important. The sooner you know the status of your loan, the safer your earnest money stays. It’s important to talk about these things with an agent before beginning your home search. The better information you have, the easier it will be to find the right home for you and your family.