Closing Coordinator Julie's previous experience as a Real Estate Agent and an Accredited Buyer Representative for new home construction has allowed her to assist buyers through the entire home buying process and now applies this knowledge to provide exceptional care to home buyers from contract to closing.
One of the first financial obligations you'll have when buying a new home is to write an earnest money deposit check.
What is an Earnest Money Deposit?
The simple answer is: money paid to confirm a contract. It is meant to show you are earnest (sincere) about purchasing a new home.
The key thing to note about earnest money is that it is a deposit - a partial payment that you pay up front, but is applied towards the purchase of your new home at closing.
Earnest Money offers the seller (or homebuilder) protection by way of financial assurance - it says you are serious about buying the home.
How much Earnest Money do I have to pay?
Earnest money is usually a percentage of the sales price or sometimes a fixed amount, but most often it is pre-determined before the home is listed for sale.
For Omega homes, it is usually between $500 to $5000 (your New Home Sales Agent will be able to answer all of your questions when you're ready).
When do I pay the Earnest Money Deposit?
When choosing a new construction home, writing your earnest money check is the final part of the contract signing process. You must provide your earnest money check when you sign the contract - don't forget your checkbook!
Omega offers a lot reservation agreement which allows you to reserve a specific lot (not house) by paying a deposit and waiting to sign the contract for 30 days. This deposit is applied towards the earnest money once you've signed the contract.
Is Earnest Money refundable?
In real estate, earnest money is typically considered non-refundable, but that is not always the case.
If your contract has conditions that must be met, called contingencies, then your earnest money would be refundable if those conditions are not met.
Understanding the terms of the contract and making sure you are not in breach of the contact is the best way to ensure you don't lose your earnest money.
How do I pay Earnest Money?
Due to legal requirements, earnest money must be paid by check, money order or wire transfer.
What happens to Earnest Money when I close on my new home?
As a deposit, earnest money is applied towards the expenses that come with closing your home or towards your down payment. Your lender can help identify exactly where your earnest money will be applied.
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This article is provided for informational purposes only. Omega does not warrant or guarantee the accuracy of the information provided and makes no representations associated with the use of this information as it is not intended to constitute financial, legal, tax, or mortgage lending advice. Omega Builders encourages you to seek the advice of professionals in making any determination regarding, financial, legal, tax, or mortgage decisions as only an informed professional can appropriately advise you based upon the circumstances unique to your situation.