Ernest money deposit
An earnest money deposit is not related to the mortgage. This deposit is often asked for upon signing of an Agreement of Sale to purchase real estate. It’s purpose is to show your commitment to purchase the property. Should you back out of the deal, your earnest money deposit may have to be forfeited. If you cannot complete the deal because you cannot qualify for a mortgage, the earnest money is usually returned. MAKE SURE THIS IS SPELLED OUT IN THE AGREEMENT OF SALE! Assuming you follow through with the purchase of the property, the earnest money usually becomes part of your down payment.
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