As clients enter the real estate world, they may hear the term “Earnest Money”. Earnest money refers to a check drafted from the buyer’s bank account, which is either a cashier’s check or a personal check, that is issued to the title company. That money will be held by your title company in a trust account as a monetary commitment to show earnestness on behalf of the buyer to buy a specific home or property. The actual amount of earnest money needed is usually decided by the buyer and buyer’s agent when crafting a compelling offer. A typical amount of earnest money is usually between $500 and $5,000. When an offer is made, potential buyers may offer a reduced earnest money deposit, which then must be reviewed and accepted by the seller before a contract is considered active. The amount of earnest money will depend upon the closing period, amount of down payment needed, and the interest level of the property or value of the offer. Once the property is officially under contract, there are three different ways the money may be handled at this point. The money may be used towards closing costs or a down payment, credited to the buyer, or forfeited to the seller. When closing on a property, clients also have the option of providing the entire down payment to the title company and once the property is fully closed on and recorded, clients can then request the earnest money is credited back to them, else, the earnest money goes toward the down payment. Lastly, the earnest money will be forfeited to the seller if the buyer breaks contract and the home doesn’t close. American Secure Title Insurance Agency will assist clients with any questions they may have concerning earnest money, and any other aspect of purchasing a home.