What Is Earnest Money?

Buying a home can seem like a complicated and overwhelming process for anyone who is in the market for the first time. There are so many particulars that need attention. The team at Arrowhead Title, Inc. is here to make the process a little easier by filling you in on one piece of the real estate puzzle: earnest money.

What Is Earnest Money?
Simply put, earnest money is money you provide when you submit your offer to the seller - a deposit that shows the seller you are serious (or "earnest") about buying the home. Without this deposit, the seller may not trust you to follow through with the purchase and may not accept your offer.

How Much Earnest Money Do I Need?
There is no magic number for the amount of earnest money you should provide, but typically the amount ranges from 1-3% of the total sale price of the home. The amount of earnest money you put down should strike a delicate balance. If you put down too much, it may create complications with your mortgage application. If you put down too little, it may cause the sellers to think you are not serious about the purchase.

What Happens To The Earnest Money?
Your check for the earnest money will be held by an independent party - your Lake of the Ozarks title insurance agency. The check will remain undeposited until the sale of the home is complete, at which point it will be applied to the down payment on your loan (or towards your closing costs if you are getting 100% financing).

Will I Get My Money Back If The Sale Falls Through?
You will almost always get a piece of your initial deposit back if the sale of the home does not go through, but the exact amount you get back will depend on the reason the sale fell through and how late in the process it happens. 

Questions? Contact Arrowhead Title!
If you have more questions about earnest money or other aspects of buying a home at the Lake of the Ozarks, feel free to reach out to the team at Arrowhead Title, Inc. We would be happy to help!

The Lake of the Ozarks' Most Trusted Title Company


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