The first thing to do is review your contract in detail and be certain that there is a finance contingency. In other words, be certain that you are indeed entitled to get the money back if your loan falls through. Also, bear in mind that in most cases where there is such a contingency, the buyer is obligated to use good faith in seeking a loan, and must exhaust all reasonable avenues for a loan. So, if the buyer is turned down by one lender, then he would ordinarily need to apply elsewhere, even if the terms are not as favorable.
If you are certain that you are entitled to a refund based on what I wrote above, then my suggestion is to sue in small claims court since the amount is only $1,000. There’s no reason to hire an attorney for this.
Fortunately, small claims court is designed for non-attorneys, and the rules of procedure and evidence are relaxed in comparison to other courts. Most likely, your only expense should be the filing fee and service fee. At the trial, you'll need to show the judge that the seller has breached the sales contract by failing to refund the earnest money. Accordingly, be sure to bring all of your evidence with you to court, including the contract itself, and the proof that your financing fell through.
In order to sue in small claim court, you should visit the local court clerk for the proper forms. Then you fill out the forms, file them with the clerk, and ask for the sheriff to serve the summons. After the defendant is served, a trial date will be scheduled.
Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied.