What Is An Earnest Money Deposit? Do I Need One When Buying A Home?
What Is An Earnest Money Deposit? Do I Need One When Buying A Home?
What Is An Earnest Money Deposit? Do I Need One When Buying A Home?
What Is An Earnest Money Deposit? Do I Need One When Buying A Home?
What is an earnest money deposit?
Do I need to provide one when buying a home?
An earnest money deposit, or EMD is a sum of money that the buyer deposits into a non-interest-bearing account, typically with a title company. This deposit is usually anywhere between 1%-3% of the total sales price of the home and is made once a buyer's offer has been accepted by sellers.
The purpose of an earnest money deposit is to show the seller that the buyer is serious about the home purchase. It also holds the buyer accountable to the terms of the contract. Should the buyer breach the terms of the contract, the earnest money deposit could potentially be given to the seller as a result.
That said, as long as the buyers abide by the contract, this money will be protected. This is not to say a buyer cannot back out of a transaction without losing their earnest money deposit. When a buyer backs out of a home purchase for one reason or another, it needs to be done in concurrence with the language of the contract.
Don’t worry, this isn’t extra money you needed to be saving up that you didn’t know about. The EMD goes towards closing costs and down payment. When settlement day arrives and the buyer has to wire funds, the earnest money deposit will already be with the title company.
The earnest money deposit is an integral part of the home purchase and every buyer will need to be prepared to provide an earnest money deposit.
A few things to remember about the earnest money deposit:
These funds are deposited in an non-interesting bearing escrow account according to the terms of the contract. This means if the contract stipulates a 3 day timeframe to deposit the earnest money funds, that is a hard deadline. If these funds are not deposited within the time frame in the contract, the buyer will be in default.
The earnest money deposit is part of the total closing costs and down payment.
Depending on the default terms of the contract, the earnest money deposit is at risk if the buyer does not show up at settlement with the funds. There are many ways to default so this should be fully explained to you, the buyer, before signing the contract.
A final note, when wiring funds it is imperative that you follow all wiring instructions provided by the title company. Wire fraud is a very serious and prevalent issue and all necessary precautions must be taken when sending money to your title company.
We will not share your information with anyone....
Thank you for requesting more information...
We value and protect your privacy and will never share your contact information with anyone else.
How can we help?
If the exclusive buyer agents at HomeBuyer Brokerage can assist you in any way, please don't hesitate to contact us at info@homebuyerbrokerage.com.
What Is An Earnest Money Deposit? Do I Need One When Buying A Home?
What is an earnest money deposit?
Do I need to provide one when buying a home?
An earnest money deposit, or EMD is a sum of money that the buyer deposits into a non-interest-bearing account, typically with a title company. This deposit is usually anywhere between 1%-3% of the total sales price of the home and is made once a buyer's offer has been accepted by sellers.
The purpose of an earnest money deposit is to show the seller that the buyer is serious about the home purchase. It also holds the buyer accountable to the terms of the contract. Should the buyer breach the terms of the contract, the earnest money deposit could potentially be given to the seller as a result.
That said, as long as the buyers abide by the contract, this money will be protected. This is not to say a buyer cannot back out of a transaction without losing their earnest money deposit. When a buyer backs out of a home purchase for one reason or another, it needs to be done in concurrence with the language of the contract.
Don’t worry, this isn’t extra money you needed to be saving up that you didn’t know about. The EMD goes towards closing costs and down payment. When settlement day arrives and the buyer has to wire funds, the earnest money deposit will already be with the title company.
The earnest money deposit is an integral part of the home purchase and every buyer will need to be prepared to provide an earnest money deposit.
A few things to remember about the earnest money deposit:
These funds are deposited in an non-interesting bearing escrow account according to the terms of the contract. This means if the contract stipulates a 3 day timeframe to deposit the earnest money funds, that is a hard deadline. If these funds are not deposited within the time frame in the contract, the buyer will be in default.
The earnest money deposit is part of the total closing costs and down payment.
Depending on the default terms of the contract, the earnest money deposit is at risk if the buyer does not show up at settlement with the funds. There are many ways to default so this should be fully explained to you, the buyer, before signing the contract.
A final note, when wiring funds it is imperative that you follow all wiring instructions provided by the title company. Wire fraud is a very serious and prevalent issue and all necessary precautions must be taken when sending money to your title company.
Request More Information
We will not share your information with anyone....
Thank you for requesting more information...
We value and protect your privacy and will never share your contact information with anyone else.
How can we help?
The exclusive buyer agents at HomeBuyer Brokerage specialize in serving home buyers. Please reach out with questions at info@homebuyerbrokerage.com.
