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About Brad Gough
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Free Guide

When Does the Full Down Payment on a House Need to Be Made?

It is fair to say that one of the things buyers are most concerned with is coming up with a down payment on a house. What is often not clear to them is when a buyer is required to make that payment. At what point in the home-buying process are you supposed to cough up that cash?

The good news is that you do not need to come up with the entire down payment when you make an offer and submit a purchase agreement, but you might need to include an earnest money deposit with your offer. And you will have to provide the remainder of the down payment at closing.

Earnest money deposit vs. down payment

There is a big difference between the earnest money deposit, the cash you provide along with your offer, and your down payment, which is the amount your lender requires you to put toward the purchase of the property. The deposit tells the seller you are a committed buyer, and it helps fund your down payment. The biggest difference between these two types of payments is that the earnest money deposit is relevant to the home seller and the down payment is relevant to your lender.

Earnest money deposit

The expected amount of an earnest money deposit varies. On average, you can expect to hand over 1% to 2% of the total purchase price.

The amount of your deposit varies widely according to local customs and the price of the home you are buying. In some cases, a $500 deposit is sufficient; but if you're in a competitive housing market, you should make your earnest money deposit larger.

The more you can put down, the stronger your offer looks to a seller. Releasing the earnest money early to the seller can help secure deals in competitive markets.

The lowdown on the down payment on a house

The amount of money required for your down payment will vary based on your loan, but it is typically in the 3.5% to 20% range. That is a lot of cash to have sitting around. Most people need to sell their current home first to have the cash available to make the down payment.

One option to scrounge up the necessary funds is to borrow from your retirement funds and immediately replace them in full when you have access to the funds from your home sale.

In most cases there is no penalty for using the your retirement funds for a home purchase, but there could be a limit on how much you can borrow. Be sure to check with your retirement plan administrator or investment company to make sure you will not pay a penalty on the transaction.

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Charities That Brad Gough Supports

There are so many great charities out there that and it is very hard to decide what to donate to. My wife Elissa and I have been very fortunate and have a good life. We simply can't donate to everything, however, we are very passionate about several different causes. We are sustaining members for the following organizations and encourage each of you to donate in any way you can to a cause that you are passionate about too.

The American Society for the Prevention of Cruelty to Animals

Bradley Thomas Gough
Associate Broker

12401 Old Meridian Street
Carmel, In 46032


Mobile (317) 590-3571

Office (317) 844-1131

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