Could we put less down-payment then what is on the offer we signed to the seller?

Question

We originally made an offer with 90k down, but they countered and we accepted and want to do less now, 68k down payment to build a bathroom. We're in escrow right now.

Will there be a problem with the seller because of this?

Answer 1

The amount you are putting as a down-payment is between you and your lender. The seller would only be concerned if the decision to lower the amount of the down-payment would impact your ability to get the loan, and closing could be delayed or canceled.

At the beginning of the negotiation for the house you did offer to pay a deposit, which was to show you were serious about the offer. That deposit which you made when they accepted your offer is being held in an escrow account, and will be included in the money exchange at closing.

The deposit was to protect the seller when they agreed to take the house off the market. According to the terms in the real estate contract, if you fail to complete the deal on time, the money you have put as a deposit could be turned over seller.

The impact of wanting to put less money as a down-payment could impact the loan in a number of ways:

• The amount of the loan will go up. That is due to initial amount of the loan being purchase price minus down-payment. If you lower the down-payment the initial amount of the loan will be higher.
• That additional loan amount will increase the required monthly payment. To afford that higher amount you will need to have a higher monthly income.
• It is possible that the lower down-payment could require a higher interest rate, which would increase the monthly payment.
• The lower down-payment could also require you to pay for Private Mortgage Insurance, which could again raise your monthly payment.

Talk to your agent if you have any questions about the implications. The real estate contract should provide information regarding the deposit and any deadline to arrange the loan. If you are past that deadline then failing to complete the deal could put the deposit at risk.