The Magic of Earnest Money

Once you have found a house you like and you are ready to submit an offer you must provide Earnest Money along with the contract.

Where Did My Earnest Money Disappear To And When Will I See It Again?


It is hard to understand why earnest money is required and how it works with your real estate transaction. This can make you feel anxious because you’re thinking “Gosh, I need that money so that I can pay my closing costs and make a down payment on my loan.”



Here are 6 facts about Earnest Money to help you understand what it is and how it works:


  • Earnest money is a specific form of security deposit made in real estate dealings to show you are serious and willing to demonstrate an earnest of good faith about completing the transaction.


  • Earnest money provides compensation to the seller if you decide to back out of the deal and are in violation of your purchase agreement.  


  • Earnest money will be held in escrow during the contract period by a title company, lawyer, bank, or broker – whatever is specified in the contract. It does reappear! 


  • The amount of the earnest money payment is set by the seller and their listing agent and can be a flat amount or a percentage of the purchase price.


  • Earnest money does not typically show up on your initial loan document known as the Loan Estimate because the lender has to verify that it has cleared your bank account in order to show it as a credit there. 


  • Earnest money you paid gets released from escrow at the time of closing and is used to help pay your closing costs and/or your down payment. All or a portion of it is often times refunded to you at closing if it is not needed.


Because I understand a lot of the TRICKS OF THE TRADE I can answer your questions before you worry about where your money has disappeared to! 





I want to be your guide and a valuable resource to you!!


If you or someone you know is thinking about buying or building a home please have them contact me.   


Judy Ingels

                            (719) 229-7999