I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.

Dollars

Where does my Earnest Money go? A basic and very obvious question that most First-Time home Buyers ask once their purchase contract gets accepted.

Earnest Money – an earnest payment (sometimes called earnest money or simply earnest, or alternatively a good-faith deposit) is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the purchase.

When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations.

An Earnest Money Deposit (EMD) is simply held by a third-party escrow company according to the terms of the executed purchase contract. For example, there may be a contingency period for appraisal, loan approval, property inspection or approval of HOA documents. In most cases, the Earnest Money held by the escrow company is credited towards the home buyer’s down payment and/or closing costs.

*It’s important to keep in mind that the EMD may actually be cashed at the time escrow is opened, so make sure your funds are from the proper sources.

The Process:

  • Earnest Money is submitted to an escrow company with the accepted purchase contract
  • At the close of escrow, the EMD is credited towards the down payment and / or closing costs
  • If there are no closing costs or down payment, the EMD is refunded back to the buyer

Who Doesn’t Get Your Earnest Money:

  • Selling Real Estate Agent – A conflict of interest
  • Sellers – Too risky
  • Buying Agent – They shouldn’t have your money in their account

You May Also Like:

  • 73
    Items to Bring to a Closing AppointmentYour real estate agent and/or mortgage loan officer should provide you with a final list of documents that need signatures or updated verifications, so the general list of items needed at closing is quite basic: 1. Funds To Close – If you are required to bring in a down payment…
    Tags: closing, costs, escrow, real, estate, mortgage, payment, company, earnest, money
  • 71
    Acceptable Sources of Cash to Close FundsProviding proper asset documentation and the actual source of the funds is a critical element of the loan closing process. There's nothing worse in a real estate purchase than making it all the way through the hoops and hurdles just to have a loan denied after the final documents have…
    Tags: payment, money, mortgage
  • 69
    Four Possible Reasons to RefinanceSince there are many reasons a homeowner may choose to refinance, we'll take a look at the four most common. 1. Mortgage Rates Drop: Typically, the most common reason that homeowners refinance their mortgage is to secure a lower interest rate. Interest rate and loan amount determines the total cost…
    Tags: mortgage, payment
Get Pre Approval

Mortgage Pre-Approval
in Minutes

Get Pre-Approved

See the Latest