Selling your property? Deposit vs down payment, knowing the difference
Selling your property? Deposit vs down payment, knowing the difference
When you are selling your property, you should be proficient about related real estate language.
You need to know the distinction between a hard and a soft title, a mortgage and a loan, and - just as importantly - the distinction between deposit and down payment...
There lots of real estate sellers, and even some buyers, who think that these two sorts of payments mean the same thing; and they certainly do not. When it comes to start selling your property, you need to be clear on these two terms, or it is a mistake that could cost you a lot of money!
Deposit:
A deposit is the money given to the owner of the property when a buyer shows enthusiasm to purchase the property. The amount of this deposit could be anything from 5 percent of the overall value, to as little as four or five hundred dollars.
The deposit is credited to the client and structures a portion of his or her down payment when the purchase eventually pushes through. It’s a way of stopping other buyers from taking the property while you reach your final decision.
But, it is not a binding and unbreakable statement of purchase! Think of a deposit only as an expression of intent - but nothing more. The property is still for sale.
Down Payment:
A down payment, otherwise known as equity, on the other hand, may be viewed as a binding pre-payment on the property.
A down payment is given when the client has resolved to acquire the property; unlike a deposit, where the customer is attempting to lengthen their opportunity to secure the purchase.
When you are selling your property, a down payment is the best!
It is really simple to recognize these distinctions when selling your property. Remember that the deposit turns into a piece of the down payment after the trade pushes through, and will be altogether smaller. These two types of payments, consolidated with the outstanding balance, should equal the total cost of the house being referred to.
Hopefully that clears up the distinction between these two terms for the next time you are selling your property.
