What is the difference between a “Downpayment” and “Earnest Money”?
Usually, they are the one and the same and represents a lump sum of funds deposited by the Borrower or Mortgagor in favor of the Lender or Mortgagee to demonstrate good faith and commitment to proceed with the transaction to purchase real property from the Mortgagee. In some cases, Earnest Money is similar to a Sign-On Bonus that is due to the Lender/Mortgagee at the time of acceptance of an agreement to purchase. At the time of closing additional downpayment may be received by the Lender.
