Earnest money deposits – first time home buyer tips

Earnest money deposits – first time home buyer tips

A first time home buyer asked me where that earnest money deposit went to.  He wanted to know if it was part of his down payment.  The simplest way to explain it is that the earnest money you give me when signing the purchase agreement is applied as a credit to you at closing.

So the title company will deduct that from the purchase price and the amount you need to bring in.  It will show up on the final hud in black and white.

For example if you are buying a $125,000 house and you put down $2000.00 it will show up as a deduction from the purchase price.  i.e.    $125,000

–               2,000

$123,000 so you will owe that minus the loan.

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I hope this clarifies how the money is handled.