Q: We signed into a new home contract, gave ernest money of $1000 and didnt get approved by bank. who does $ go to? In TX
Seller agent says the money goes to them because buyer is terminating the contract. We didnt terminate, the bank just denied us. Its the TREC form.
A:
If your purchase of the property was contingent on you getting third party financing (for example, from a mortgage company), your TREC earnest money contract should include the Third Party Financing Addendum.
Paragraph 2 has optional boxes to check concerning what happens to the earnest money deposit if third party financing is not approved.
There are a couple of different options and considerations. For example, sometimes financing is not approved because of the lender’s appraisal of the property, not the prospective buyer’s credit worthiness.
Read your contract focusing on paragraph 2 of the Third Party Financing Addendum. If you cannot understand, your realtor should be able to explain it to you for much less than you will pay for a consultation with an attorney.
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