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tiate on the purchase price a little if you make a bigger good-faith deposit. On the other hand, you may not want to put too much earnest money down. Coming up with that much money, and losing the use of it for weeks or months before the sales contract closes, may not be the best use of your cash. However, you may wind up having to do some paperwork for your mortgage lender, and the bank may want to verify the source of the funds for larger deposits of ear- nest money. It won't be a problem if you can show that you've had the money for at least 60 days. When do you make an earnest money deposit, and who holds it? In most cases, after your offer is accept- ed and you sign the real estate purchase agreement, the contract stipulates that you give your deposit to the title company. Always verify that the funds will be held in escrow. Never give the earnest money to the seller; it could be difficult or impossible to get it back if something goes wrong. After turning over the deposit, the buyer's funds are held in an escrow account until the home sale is in the final stages. Once everything is ready, the funds are released from escrow and applied to your down pay- ment. Can you get your earnest money deposit back? If the deal falls through, a small cancella- tion fee is usually taken out of your earnest money deposit, but the remainder remains in escrow. Whoever holds the deposit de- termines whether you should get the ear- nest money back under the terms of the purchase and sale contract. Make sure that the purchase agreement covers how an earnest money deposit refund is handled. To be on the safe side, make sure the pur- chase agreement contains contingency addendums that stipulate how a refund is handled (e.g., an inspection contingency protects the buyer if the real estate fails a home inspection). Buyers can also usually get their earnest money back if they find problems with the property, or if they are unable to get title insurance. A financing contingency ensures that the earnest money is refundable and the buyer can get out of the transaction if he can- not get financing. Keep in mind that a pre- approval from a lender does not guaran- tee a borrower can get a loan at mortgage rates he can afford. Even if a buyer has a good credit score and is pre-approved for a mortgage loan, the lender can still turn him down based on unforeseen factors such as the appraisal amount being too low. In such cases, a standard contingency allows buy- ers to renegotiate the purchase contract, or get their money back. The bottom with earnest money or any- thing real estate related is to work with people that you trust, do your homework so that you feel at ease with the process and lingo and come to the table prepared with knowing your credit score, your ability to put money down and the likelihood of purchasing a new home.