What is Earnest Money?
Earnest money is a good-faith deposit a buyer submits with an offer, held in escrow and applied to closing costs or down payment if the sale closes.
Earnest money is a deposit made by a homebuyer to show serious intent to purchase. It is typically held by a real estate brokerage, title company, or escrow agent and credited toward the buyer's closing costs or down payment at settlement. Borrowers encounter it when making an offer, often as a percentage of the purchase price. Watch for the conditions under which the deposit may be refundable, such as financing, appraisal, or inspection contingencies. If the buyer defaults without a valid contingency, the seller may keep the earnest money. Understand the contract terms before releasing funds.
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