What is earnest money? Sometimes agents throw around these terms, forgetting that you might not understand what they mean. That’s why I want to slow down and explain earnest money.
Earnest money is what starts to make the contract legally binding. For a contract to be legal, it needs to be signed, and there needs to be money transferred. That’s what earnest money is; some call it a good-faith deposit.
Typically is 1% to 3% of the purchase price. As a buyer, think about this money as being at risk. If you can’t complete the contract or have removed your contingencies, you may lose your earnest money deposit. We don’t want that to happen.
After closing, that earnest money is applied to your closing costs and purchase money. You don’t lose this money if you can go through with the contract.
If you have any more questions or have another term you’d like me to explain, please call, text, or email me. I’d love to help.
