This knowledge will help you avoid accidentally losing your earnest money.

Can a seller take your earnest money if you change loan programs? Let’s say you’re prequalified and found the perfect home, so you sign an agreement with the seller, and everyone agrees on the price and terms. Then, you learn that you can get a lower interest rate. If you decide to change loans and get a better rate, can the seller take your earnest money?

The truth is that the answer depends on a few things. First, we will assume that you’re buying in Arizona according to the terms of the purchase contract that we’re currently using The problem comes when the buyer and their agent don't fully understand the contract. We want to prevent buyers from putting themselves in this tough position, so here are some things you should understand before acting on switching your loan.

"Remember that some changes require the seller’s written consent."

Start by asking yourself if you’re within 10 days of contract acceptance and if you’ve notified the seller. The contract requires that you notify the seller if you make certain changes within the first 10 days, and some of the changes may require the seller’s written consent.

When do you need this written consent? You need written consent if the change affects your ability to be approved for a loan, increases the seller’s closing costs, or delays the closing. A few specific examples would include if you’re changing lenders, switching from conventional financing to a VA or FHA loan, or changing the terms of the contract. If you stay within the same loan program and with the same lender but decide to buy down your interest rate, your earnest money should not be at risk.

If you have any questions about the market or real estate in general, reach out by phone, email, or click this link to submit a contact request. We look forward to hearing from you soon.





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