Once you go under contract on a home, you’ll be asked to put down an earnest money deposit. It’s one of the first real financial steps in the buying process, and it’s important to understand what it actually protects.
What Is Earnest Money?
Earnest money is a deposit that shows the seller you’re serious about the purchase. It’s typically 1% to 3% of the purchase price and is held in an escrow account, not paid directly to the seller.
What Happens to It at Closing?
At closing, your earnest money is applied toward your down payment or closing costs. It’s not an extra expense, it’s simply money you’re putting toward the purchase earlier than the rest.
When Could You Lose It?
- If you back out of the contract without a valid contingency in place
- If you miss deadlines outlined in the contract, like inspection or financing periods
This is exactly why contingencies matter so much in a purchase agreement. Andrea Griffith makes sure every offer she writes protects your deposit while keeping your offer competitive. Call or text 423-667-8610 with any questions before you write an offer.