Earnest Money: What You Need to Know About before You Put Money on an Offer

Published on April 1, 2022 under Tips

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If you're looking to buy a property, there are a whole host of things that come into the picture. Before you put in an offer to buy a particular home, you need to get pre-qualified. To execute the process of pre-qualification, you can contact your lender. One of the best ways to expedite this process is to choose a local lender who knows the ins and outs of the real estate market. The real estate market is overwhelming, which is why it's vital to know a few details about it first. Further, reliable local lenders will guide you through the entire home buying process. If you're unaware of earnest money, this article will help you with complete details. Keep reading!

What is Earnest Money?

Earnest money is a financial deposit that shows you're serious about buying a home. Sometimes called a good faith deposit, it acts as a security deposit to the seller if any buyer wishes to purchase the same home listed on the market. Both parties enter into an agreement for home buying/selling. During this step, the home seller removes the property from the market list. In case the home buyer abandons the deal, the home seller incurs a huge loss. They have to start the whole process again to list the property in the selling market.

To protect the seller from the financial hit, earnest money comes into play. Usually, the earnest money ranges between 1-3% of the sale price. This money is safe in an escrow account until the completion of the property deal. If the property deal falls off, the seller gets the money. But if the deal falls off due to the seller, the buyers get their money back. For both parties, earnest money acts as proof of a deal.

How to Deposit Earnest Money With Ease

Depositing money comes with responsibilities. You need to understand the common issues that people face while depositing, which includes calculating the right amount of earnest money. This amount will depend on the real estate. For instance, if the property you're planning to buy is in a hot market, chances are that you'll have to pay more. On the other hand, for properties in a slow market, you can pay way less money.

Can You Get Your Earnest Money Back?

Earnest money is refundable, depending on the circumstances of the deal falling. If you don't break the rules of the contract, you can get your money back. But if you break after the deadline, you won't be eligible for the money. If you wish to get your money back, your first step is to contact the salesperson. This will help you to understand the agreement and the backout criteria. If you can't handle the task on your own, reaching out to experts should be your first call. They will guide you through the whole process so that you don't lose a single penny.

Start Your Home Buying Journey with First Savings Mortgage

Before you put in an offer, be sure you choose a reliable loan officer for help. The team at First Savings Mortgage is one of the leading mortgage companies in DC. With 30 years of experience, we can help you make the pre-qualification process smooth. Get in touch with First Savings Mortgage today to get pre-qualified for home buying and make buying a home as simple as can be. We would love to assist you in your new home buying journey!

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