What is earnest money & escrow?
When you are ready to make an offer to purchase a home, you will write a check for a meaningful amount to money. You are in fact showing good faith and an honest commitment to do everything you can to complete the transaction. That money is know as “Earnest Money”. It is part of the total price you will pay for the house. It represents a portion of your cash investment in the house. Since it’s your money, you need an impartial, trustworthy party to safeguard it and make sure it gets properly disbursed as your home purchase transaction is completed. You need an escrow agent. When your money is “placed in escrow”, it’s placed in a safeguarded condition. Typically the Title Insurance company chosen to write the Title Insurance policy will act as escrow agent for the transaction and will also facilitate the closing process. Only you can put your earnest money in jeopardy, if you don’t comply with your responsibilities according to the terms of the purchase contract you agree to.
