Have you wondered what “Earnest Money” is and what it does?
Erica Quamme, Realtor with House Hunters Minnesota, clearly walks you through what earnest money means and how it works in Minnesota.
What is Earnest Money?
“Earnest Money” is money paid to confirm a contract. In our case, the contract is a purchase agreement on a home. So when you put an offer in on a property, your earnest money must go along with the offer. If your offer is $150,000, your earnest money should be about 1% of that. Which is about $1500. This will then get cashed and held for closing. It will be taken off of your down payment amount. So if you are using FHA, you’d subtract it off your 3.5%. If you are going conventional, it would be off of 5% down payment.
Hope this helps answer questions you may have. Let us know if you have any questions, we are here to help!
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