One of the first questions many buyers ask after making an offer is, “What is earnest money?”
Earnest money is simply a good-faith deposit that shows the seller you’re serious about purchasing the home.
While it becomes part of your transaction, there are important things you should know before writing that check.
What Is Earnest Money?
Earnest money is a deposit that’s typically submitted after your offer is accepted.
It shows the seller you’re committed to moving forward with the purchase and is usually held by the title company or another agreed-upon third party until closing.
Do I Get My Earnest Money Back?
In many cases, yes.
If everything goes according to the purchase contract, your earnest money is typically applied toward your down payment or closing costs at closing.
If a contract is canceled, whether the earnest money is refunded depends on the terms of the purchase agreement and the reason the contract ended.
How Much Earnest Money Do I Need?
There’s no one-size-fits-all answer.
The amount often depends on your local market, the purchase price, and what your Realtor recommends.
Your Realtor will help you determine an appropriate amount based on your specific situation.
Is Earnest Money the Same as a Down Payment?
No.
Earnest money is a deposit made early in the transaction to show you’re serious about purchasing the home.
Your down payment is the amount you contribute toward the purchase price at closing.
If everything moves forward as planned, your earnest money is generally credited toward the funds you’ll need at closing.
Ready to Get Started?
Buying a home involves several moving parts, and it’s normal to have questions along the way.
I’ll explain every step of the mortgage process so you know what to expect from beginning to end.
Complete my Secure Online Application or give me a call. I’m here to help make the process as simple and stress-free as possible.