Understanding Earnest Money

Most homebuyers are aware that they’ll need to come up with a down payment in order to purchase a home. But what many don’t realize is that they may also need to put down earnest money. So, what exactly is earnest money?

Earnest money is a deposit made by a buyer to show that they are serious about purchasing a property. The earnest money deposit is typically held in escrow by the real estate agent or broker until closing, at which point it is applied to the buyer’s down payment.

If the deal falls through for any reason, the earnest money is usually forfeited to the seller. However, there are some circumstances in which the earnest money may be returned to the buyer. For example, if the home doesn’t appraise for the purchase price or if the seller is unable to provide clear title to the property.

The amount of earnest money required will vary from deal to deal. But it’s typically around 1-3% of the purchase price of the home. So, on a $200,000 home, you might be looking at a deposit of $2,000-$6,000.

If you’re in the process of buying a home, be sure to ask your real estate agent or broker about earnest money and what the requirements are in your area.

Looking to buy or sell your home? Real estate purchases are some of the most important decisions most people make during their lifetimes. To see a current list of Branson area homes, visit https://ift.tt/rS6yIuV