Your Earnest Money is Safely Guarded
If you are a first time homebuyer about to put down a large sum of cash on a new home, you may be wondering what happens to your “earnest money” or “good-faith deposit” in the buying process. Is the money safe, secure and used only towards the purchase price of the home?
The answer is yes! Here are the details:
Your money has a three-step journey:
Why is a deposit required?
The money you put down on a home as a deposit towards the purchase of the home demonstrates that you are serious (earnest) about wanting to purchase this property. Often the greater the amount the more seriously the seller will take your offer.
In a competitive market, where home inventory is low and buyers are more aggressive, the more serious your offer, the better your chance of an accepted offer is when compared to other offers that the seller may receive.
Things to know:
Remember, in a competitive market, the cash you put down as earnest money shows stability and greater intent than just loan financing. If you can put 10 to 20 percent down, sellers will be more impressed with your offer than if you just put the minimum down. But rest assured that your money is secure and will go towards the purchase price.
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