Down payment bonds are backed by of Lloyd's of London and provide an alternative to a down payment/earnest money deposit or a Stand By Letter of Credit (SBLC). This bond provide assurance to the seller that you will provide full funding at the time of closing.
A down payment bond is a financial alternative for the deposit or down payment required when entering into a real estate purchase transaction. A down payment bond can be utilized for all of part of the transaction’s required deposit, to a maximum of 30% of the agreed upon purchase price, and can be issued for terms of between 3 and 36 months to accommodate a wide variety of transactions, from quick turnaround resales to buy and hold land contract / contract for deed scenarios.
By utilizing a down payment bond, there is no need to use cash for the required deposit when purchasing a property. Buyers using down payment bonds do not need to withdraw cash from their personal savings or investment accounts, nor obtain the deposit via an equity line of credit or term loan on another property. A down payment bond is also considerably less expensive than traditional real estate financing.
Premium: 3-10% of bond. This is paid at time of bond issuance. No other interest or fees are incurred.
Turnaround Time: 48 hours
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