Move Page Earnest Money Promissory Note

Aug 6th, 2022
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How to Move Page Earnest Money Promissory Note

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Annie Fitzsimmons, a lawyer for Washington Realtors, addresses experienced members regarding the outdated practice of using promissory notes for earnest money in real estate transactions. She emphasizes the need to stop this practice, explaining that some agents believe a promissory note is necessary to allow buyers more time to deliver earnest money after mutual acceptance. Buyers often request delays, citing various reasons like needing time to access funds or awaiting inspection contingencies. Fitzsimmons encourages members to move away from this antiquated method for earnest money handling.

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In order for a promissory note to be valid, the borrower needs to sign it. The lender may require the borrower to sign this document in front of a notary to guarantee the signature. The original copy goes to the lender, and the borrower receives a copy.
A Promissory Note Is a Valuable Tool It provides a clear structure for repayment of the debt and it protects the lender from default and the borrower from unscrupulous lending practices.
It will be held in an escrow account and applied to the rest of your down payment at closing. If your offer to purchase is $250,000, your typical earnest money amount would range from $2,500 to $5,000. In your offer, you specify the amount of earnest money that goes into escrow should the seller accept the offer.
The Earnest Money Deposit shall be credited xx cash due from Buyer at Closing and shall be paid over to Seller at Closing. Buyer shall have the right, at its option during the term of this Agreement, to substitute one or more letters of credit for all or any portion of the Earnest Money Deposit.
The lender can then take the promissory note to a financial institution (usually a bank, albeit this could also be a private person, or another company), that will exchange the promissory note for cash; usually, the promissory note is cashed in for the amount established in the promissory note, less a small discount.
A good faith (or earnest money) deposit is payment made by the buyer at the time of signing the letter of intent (LOI). The buyer puts forth a portion, often 5-10% of the purchase price, to be placed in an escrow account. If diligence proceeds smoothly, the funds will be used toward the down payment at closing.
Documentation for Receipt of the Deposit Receipt of the deposit must be verified by either a copy of the borrowers canceled check or a written statement from the holder of the deposit. For additional information, see B3-4.3-09, Earnest Money Deposit.
Key Takeaways. A promissory note is a financial instrument that contains a written promise by one party (the notes issuer or maker) to pay another party (the notes payee) a definite sum of money, either on demand or at a specified future date.
The financing contingency guarantees that youll get a refund for your earnest money if for some reason your mortgage doesnt go through and youre unable to purchase the house.
In many ways, earnest money can be considered a deposit on a home, an escrow deposit, or good faith money.

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