Defining Earnest Money
Today I’ll explain what earnest money (aka trust money) is.
Sometimes called trust money, the earnest money is typically paid by the buyer to either a title company or a real estate firm once they go under contract on a home. The amounts can vary by price point, but in our area, it’s typically somewhere between $500 to $1,000.
In the event the buyer releases the contract due to a contingency, the buyer is entitled to a full refund of the earnest money and can apply it either to their next purchase or put it back in their bank. If they default on the contract or otherwise cannot close due to faults of their own, the money is disbursed to the seller for their time off the market. The main goal is always to make it to the closing table. At that point, the earnest money can be applied to either your closing costs, down payments, or even be sent back to you if you have a 100% loan.
If you have any further questions, don’t hesitate to reach out to me. I hope to hear from you soon!