Earnest money is a deposit a buyer pays to show good faith on a signed contract agreement to buy a home. The deposit is held by a seller or third parties like a real estate agent or title company. If the home sale is finalized or “closed” the earnest money may be applied to closing costs or the down payment. If the contract is terminated for a permissible reason, the earnest money is returned to the buyer. If the buyer does not perform in good faith, the earnest money may be forfeited and paid out to the seller.
“Mortgage Key Terms.” Consumer Financial Protection Bureau, https://www.consumerfinance.gov/consumer-tools/mortgages/answers/key-terms/. Accessed 21 May 2021.
Legal Disclaimer: The content on this page provides general consumer information. It is not legal advice or regulatory guidance. New Dwelling Mortgage updates this information periodically. This information may include links or references to third-party resources or content. We do not endorse the third-party or guarantee the accuracy of this third-party information. There may be other resources that also serve your needs.