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Filled with mysterious acronyms and confusing terms - we created these resources to demystify the real estate business.

O.K., so what does “earnest money,” “down payment,” and “closing costs” mean?

Buyers

Fair question.

Earnest money is the money you put down on a home when you make an offer. It’s a way to show to the seller that you’re serious or “earnest” about wanting to buy their house.

The down payment is a percentage of the home cost you pay directly to the seller. The amount of a down payment can be anywhere between 3% and 20%. So, if you’re buying a $100,000 home, your down payment could be anywhere from $3,000 to $20,000.

Finally, closing costs refer to the costs associated with processing all of the documents related to your home loan, appraisals, etc. Closing costs run around 3% – 5% of the cost of the home and can paid by either the seller or the buyer. They’re paid at the time of “closing,” when you sign all the paperwork that seals the deal.


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