Earnest Money
Earnest money is a good-faith deposit made by the buyer after a purchase agreement is signed, demonstrating serious intent to complete the transaction.
The deposit is typically held in an escrow account managed by the title company or closing attorney. At closing, earnest money is credited toward the buyer's down payment or closing costs.
Earnest money is not an additional cost — it is applied to what you already owe at closing. However, if the buyer defaults on the contract without a valid contingency, the deposit may be forfeited to the seller.
Why This Matters: A strong earnest money deposit signals to the seller that you are a committed buyer. Understanding the terms under which it is refundable — and when it is not — protects your investment before closing.
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