Most of my Cookeville TN area home buyers know they are going to need a checkbook to buy a house. But almost every first time home buyer gets confused when earnest money checks and down payments enter the discussion. Here is a very streamlined explanation of both items.*
Earnest money: To borrow from Oscar Wilde, there is real importance to being earnest when buying a home. The earnest money check proves that the buyer is really serious, or earnest, about the offer they have just presented to the seller. Since some buyers think offers are either phoned-in or texted, earnest money checks really catch sellers’ eyes. If an offer is accepted, the earnest money is applied toward the purchase price. If the offer is rejected, the earnest money is returned to the buyer.
Down payments: They also apply to the home purchase and are delivered at or near closing to complete the total purchase price for the home. Buyers are required to prove that the down payment funds exist early in the process so that there are no rude surprises at closing. But they don’t have to write that check until they are much closer to closing and receiving the keys to their new home.
Cookeville TN REALTOR® Brenna Piper, ABR, has worked with American Way Real Estate since 2002. A former television news photographer and corporate marketing director, she provides accomplished marketing and negotiating services to sellers and buyers across ten countries of Tennessee’s scenic Upper Cumberland area.
*Real estate processes, regulations, and laws vary from state to state and from market to market. Please ask a professional in your area for specific information for your location.