The earnest money deposit is what a borrower gives to the seller when they are making an offer to purchase a house. In the event the buyer decides to NOT purchase the sellers house after the contingency period the seller gets to keep the earnest money deposit. The earnest money deposit can range from $500 to as high as $5,000.
DO NOT USE CASH for your Earnest Money Deposit
When making an offer and giving the earnest money deposit the buyer needs to make sure the earnest money is not being paid with CASH. Cash is not an acceptable form of down payment or earnest money. If they buyer recently deposited cash into the bank account (with in 2 months) and wants to use the cash for the earnest money, please contact your loan officer right away.
Protecting your Earnest Money Deposit
Protecting your earnest money is very important when making an offer on a house. This is where having an experienced agent helps the buyer protect their investment. When making an offer the buyer should have at least a 17 – 30 day period to:
- Inspect the house
- Receive the appraisal
- Receiving loan approval
This way if something goes wrong with the appraisal, inspections, exc. the buyer can back out of the deal and get their deposit back.
For more information on earnest money or if you have more questions please contact your loan officer. We are here to help.