What Is Earnest Money? How Much Should I Set Aside?
Earnest money is the money put down to prove that you are “earnest” about your offer. It must be substantial enough to demonstrate good faith and is usually between 1%-5% of the purchase price, though the amount can vary with local customs and conditions. If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you must forfeit the earnest money. 9. What should I expect to happen on closing day? You will present your paid homeowner’s insurance policy or a binder and receipt showing that the premium has been paid. The closing agent will then list the money you owe the seller (remainder of down payment, prepaid taxes, etc.), then the money the seller owes you (unpaid taxes and prepaid rent, if applicable). The seller will provide proofs of any inspections, warranties, etc. Once you are sure you understand all the documentation, you will sign the mortgage, agreeing t
Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary). If your offer is accepted, the earnest money becomes part of your down payment or closing costs. If the offer is rejected, your money is returned to you. If you back out of a deal, you may forfeit the entire amount, especially if it’s written that it is Non-refundable.
