This is a question I get asked a lot... "What is the difference between a deposit and a downpayment?"
Let's get right into this weeks discussion!
So, I feel like one of those words is WAY more familiar to First Time Home Buyers, or anybody who doesn't necessarily buy real estate often... That's probably the Downpayment. That's because we hear it often in financing... Meaning in most cases you're going to need at least 5% to put towards your financing approval, and towards your purchase so that they're not financing the whole thing.
However, you may be less familiar with the term deposit.
A deposit is something that you're going to put towards a purchase to show the sellers that you're serious!
Usually, you have a conditional period around 1-2 weeks. If anything happens, that scares you away from the house and you decide to no longer go through with the transaction, you do get that deposit back in full!
Now, if you do go past that conditional period you potentially could lose your deposit because technically you're supposed to close, and that is a breach of contract
So what you should take away from this week's Tip-sy Tuesday is not only should you have your 5% (or more) downpayment you also need to have a deposit - probably around $1000 for every &100,000 that you're spending on a home!