Earnest Money Deposit or EMD
When you sign a contract to purchase a home, you’ll provide an “earnest money deposit” to be held until closing in an escrow account by the attorney for the homeowner. If you are purchasing a HUD Home the EMD check is presented with your Offer by the HUD Approved Broker in the bidding process.
If you’re applying for an FHA loan, the EMD usually equals your 3.5% down payment. If you apply for other types of financing—-VA or Conventional—then your Real Estate Agent or Attorney will guide you as to the amount requested by the Seller.
There is no “set” or required amount for the EMD, although many Sellers’ often request 10% of the purchase price. This is a matter of some negotiations between your Real Estate Agent/Attorney and the Seller’s Agent/Attorney.
For example, what if you’re closing out a CD for your entire down payment but you only have $10,000 cash on hand for the EMD today? It’s important to discuss with your Real Estate Agent/Attorney before you come in to sign the contract the amount of the EMD.
Do you have questions? Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.
Check out my Trulia profile HERE
Check out my Zillow profile HERE
Find me on TWITTER: @tcurranmortgage