If you’re buying a house, your Lake City Realtor® will probably ask you about your earnest money deposit.
But what is earnest money, and is it necessary to purchase a home?
What is Earnest Money?
An earnest money deposit helps fund your down payment—and at the same time, it shows sellers that you’re a serious buyer.
If you didn’t put down an earnest money deposit, you could run around town making offers on every home that suited your fancy. However, if you did that, all but one seller would be left out in the cold. For that reason, most Sellers won’t accept an offer without an earnest money deposit.
Who Gets the Earnest Money Deposit?
If the seller accepts your offer, the earnest money you deposited will go toward your down payment and closing costs. In many cases, if you later decide not to purchase the home, you can get your earnest money (at least most of it) back.
Typically, you’ll give your earnest money deposit to the title company or the real estate broker. You should never give earnest money directly to the seller; you want to be sure that it is being held in escrow.
How Much is an Earnest Money Deposit?
While every situation is different, an earnest money deposit is typically between 1 and 2 percent of the homes total purchase price. Sometimes you can use your earnest money deposit as a bargaining tool; some Sellers are willing to lower the price of the home if you make a larger earnest money deposit.
When Will They Cash Your Earnest Money Check?
Most often, the title company or broker will cash your check within a few business days. The company will hold it until you’re in the final stages of your purchase; when it’s time, they’ll release the funds from escrow and apply them to your down payment or closing costs.
Are You Looking for a Home or Property in Lake City?
Call us at 386-243-0124 or get in touch with us online to let us know what you want from your next home. We’ll be happy to help you find it!