You are working with your real estate agent to create a contract on the perfect home and she asks you how much money to put down for Earnest Money. So, what is it?
Earnest money is money that you place in escrow with one of the brokerages and sometimes a lawyer. This money is meant to represent your seriousness about purchasing a home. What happens next?
1. Your contract is voided due to legitimate problems during the contract execution. You couldn’t get a mortgage. The house inspection goes horribly wrong. You’ll get your money back quickly.
2. You void the contract for no good contractual reason. If the seller is really nice then you can get it back. Otherwise, it is forfeited to the seller.
3. You complete closing and purchase the home. You will get the money back at closing or you can use it for things like closing cost.
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