A homebuyer's guide to earnest money
Maybe this is your first home purchase or just your first home purchase in a while, but getting up to speed on earnest money is easy. Especially since we've gathered these common questions homebuyers have when it comes to making their earnest money payment.
What does earnest money mean?
Earnest money is a payment made by a homebuyer to show the seller they are serious about buying their house.
When do I pay earnest money?
The timing of your earnest money payment is generally stated in your contract. In most cases, earnest money is due simultaneously with, or shortly after, the contract is signed by both buyer and seller.
Where does the earnest money go?
Typically, earnest money is held by a party called an “escrow agent” or “escrow holder.” The escrow holder may be a title company, a real estate office, an attorney’s office, or any other party designated in the contract.
Does earnest money go towards closing or the cost of the house?
In most cases, homebuyers receive credit for their earnest money deposit at time of closing.