Buying your first home can feel overwhelming, but understanding the basics makes the process much smoother. One key component every homebuyer should know about is earnest money.
So, what exactly is earnest money? Think of it as a good-faith deposit you put down when you make an offer on a home. It’s your way of showing the seller that you’re serious about buying their property.
Typically, earnest money is around 1 to 3 percent of the purchase price, depending on your market and agreement with the seller. The best part? It’s not an extra fee. Instead, at closing, this money goes toward your down payment or closing costs, making it part of your total investment in the home.
In short, earnest money is your promise to the seller. It’s a simple step that helps set you apart in a competitive market and can make your offer more appealing.
Buying a home is a big milestone, but breaking it down step by step makes it much more manageable. Follow us for more Homebuying 101 tips to feel confident and prepared on your journey to homeownership!