When you buy a home, whether it’s a house for sale in Turtle Ridge, a townhome for sale in University Park, or a home for sale in Woodbridge or Westpark, you’re going to need to make an earnest money deposit.
But what is earnest money, and why do you need it? (More importantly, where does it go after you give it to your agent?)
What is Earnest Money?
Earnest money is a deposit – sometimes called a good faith deposit, actually – that you give the seller to show you’re serious about buying his or her home.
You don’t give it directly to the seller, though. That would be too risky. Instead, you give it to your Irvine Realtor®, who gives it to the escrow holder. The money sits there until closing day, as long as your transaction goes through without a hitch.
How Much of an Earnest Money Deposit Do You Need to Buy a Home in Irvine?
Typically, you’ll spend about 3 percent of the home’s purchase price on your earnest money deposit. If you were buying a $100,000 home, you’d need to put about $3,000 down to show the seller that it’s okay to take his or her house off the market because you’re serious about buying it. (It’s kind-of putting your money where your mouth is, essentially.)
When Do You Make Your Earnest Money Deposit?
You’ll make your earnest money deposit after the seller accepts your offer and you sign a purchase agreement for the home.
What Happens to Your Earnest Money?
Your earnest money deposit will either go toward your closing costs or toward the down payment on the home.
Are You Thinking About Buying a Home in Irvine?
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