Buying a House? How to Protect Your Deposit Money

If you're buying a house, you want to make sure things are going to move smoothly the way they are supposed to. There is money on the line, your money! Make sure you don't lose your deposit along the way should something go wrong.

It all starts with the initial offer, when you put your first deposit check down to hold the house. Make sure everything, yes- everything, is written down in your original contract to purchase.

You will want to have a home inspection clause written in, giving you proper time to have a home inspection completed to make sure the house is in suitable condition and is in satisfactory condition to you.

Also important, is a mortgage contingency giving you the opportunity to apply and receive a commitment from your lender.

If there are any other extenuating circumstances, make sure those are written in there also. Do you have a house to sell to secure finances to purchase this one? Is there a Title V certification needed for the house to be approvable for financing? There can be several things you'll want to include in your offer. Make sure they are there, in writing.

The most important thing to remember is to spell out in certain terms what happens if one of these contingencies is not met. What happens to the deposit? When do these contingencies need to be completed by? And what if they're not? All these questions need to be answered to secure your deposit amount from slipping away.

It might take additional paperwork, but it's very much worth it. There are no handshake agreements in the real estate world today, when everyone is out to sue unfortunately. Everything needs to be in black and white, and signed by all the parties involved in the transaction.

The one way that you're almost guaranteed to lose your deposit money is if you default on the offer. Basically, waking up one morning and deciding that you'd like to back out of your original, signed, accepted offer. The seller would, and should, have every right to keep that money. Make sure it's a house you want to buy, and not one you're only half interested in.

When you receive your mortgage commitment, and the monthly payment is more than what you can afford, that is also not an acceptable reason to back out of the contract. If you feel ahead of time, that due to your credit, lack of down payment or any other issue that you won't be able to secure a comfortable rate, you need to put that down in writing on your initial offer.

Buying a house is an important, and costly step. You are investing a lot of money into your future home before you are even done purchasing it. Make sure you're investment is protected!