A majority of contracts include clauses that allow the buyer or seller to cancel the contract as a result of certain events. Some common contingencies include buyers’ ability to acquire financing, inspections of the property, the ability of the sellers to convey a clear title, etc. These contingencies come with deadlines that must be adhered to strictly. To protect the buyer, the contract may say that if the buyer cannot obtain a loan within one month, he or she may cancel the contract with no penalty. In this situation, you are entitled to get your deposit back within the specified time frame. 

You must also accurately inform the seller in writing before the deadline is touched. In case of any conflict or disagreement regarding the contingency, the seller may refuse to return your deposit. In this case, the contract terms are more likely to dominate and tell you the necessary actions to receive the money back. At times, you can also choose to sue the seller. However, in most cases, you are more likely to go through arbitration. You may also allow the real state board to make a decision about what occurs next. 

It is also highly critical for you to ensure that all the deadlines and conditions are followed accurately. In case you did, receiving your deposit back will not be a problem at all. However, if you didn't, it is crucial to connect with the attorney and understand if there are any other options that you can use for the best. 

You must also note that when you enter a future contract, jot down each deadline duration properly in the calendar. Such a thing will help you make sure that the next deal is likely to be smoother. 

If you are looking to purchase a new build and want to learn about new communities in Keswick, visit this page. 

How To Get Deposit Back If Mortgage Application Is Denied?

As soon as you want to purchase a house and create an offer, you will be required to put up an earnest money deposit. It indicates the seriousness of your offer. Generally, this deposit is around 1% to 3% of the overall sales price which is stored in an escrow account until the completion of the deal. 

That is why there are some critical steps that you need to take so that you can receive your deposit back in case your mortgage application is declined. 

1. 1. A Responsible Party Is Integral 

If you want to get your deposit back when the mortgage application is denied, make sure you give it to a responsible party. Always remember that it is never a good idea to give the deposit check directly to the seller. Even when it is with a contract, it is wrong. If you notice that the seller is not willing to return the money, it is best to opt for small claims court. Ensure to check the holder’s reputation online before writing the check. 

1. 2. Analyze The Purchase Agreement 

The purchase agreement is a vital aspect of the contract as it includes the deposit amount and the conditions. It also includes the person who will hold the deposit and the rights you may have in case you fail to get a mortgage. If the agreement doesn’t have a written provision for the return of the deposit, you may not get your money back. Therefore, consider every right to amend the contract so that you will have a complete guarantee that your deposit money will be returned. 

1. 3. Timing Is Crucial

The timing of the offer ends up costing buyers their deposit money. The agreement may state that you must buy the house or show proof that your mortgage has been denied before a certain time. If there is such a provision in the agreement and the buyer has not made the decision before the timeframe, he or she will not get  the deposit.  This is why you should consider removing the time limit in the contract. 

1. 4. Verbal Guarantees And Partial Agreement 

At times, you will hear your party advising you that the money should be returned to you. Also, you must receive a denial of mortgage letter that ignored your application. So, you will be required to provide this letter to the agent or realtor. The purchase agreement will have everything stated in it, including the proof of denial and other rights. 

Reasons Why Your Mortgage Application May Be Rejected By A Lender

 Lenders follow specific rules when it comes to denying or approving mortgage applications. Based on the loan type you are looking for, these rules may vary. However, here are some common reasons why your mortgage application may be rejected by the lender. 

Low Credit Score

It is among the most common reasons why lenders reject the loan application. To apply for a suitable mortgage, you need a credit score of above 680. At times, the reason for your low credit score is due to an error in the credit report or your identity has been damaged or stolen. 

Lack of Credit History 

You can show a couple of sources of proof of steady payments that are not generally reported to credit bureaus like insurance, rent, utility payments, etc. If you don’t have the credit history to show, you can avail mortgage with non-traditional credit. But if you have neither non-traditional nor traditional credit, you’ll not get a mortgage. 

Overdue Mortgage 

If you hold an existing mortgage over 60 days delinquent, the lender may reject your application. 

Lien or Judgement 

Outstanding lien and judgment must be paid before closing. If you don’t have sufficient funds to pay them, the mortgage application may be rejected. 

The Bottom Line 

Getting a loan or mortgage application can become a hard day's task if you do not know how to deal with it correctly. So, make sure you are using this article's tips and tricks to do it all right. This will help you earn your deposit back in no time. So, why keep waiting? We promise; you won't be disappointed if you follow the steps as prescribed.