What is an earnest money deposit?  Simply put, an earnest money deposit or EMD for short is a deposit that you provide when making an offer on a property you would like to purchase.  This shows the seller you are serious about purchasing their home.

If you are obtaining a mortgage, the EMD is a credit towards your bottom line costs.  Because of this, you must provide proof that the EMD came out of your account to receive the credit towards your down payment and/or closing costs.

Sometimes this makes things difficult for home buyer’s that are unaware of the mortgage process.  The best way you can provide an earnest money deposit it by writing a check from YOUR own checking account or withdrawing the funds from YOUR own checking or savings account with a cashier’s check.  If you have cash saved at home, do not deposit the cash into your bank account to use as your earnest money deposit.  It is almost never acceptable to use cash in a mortgage transaction.

An earnest money deposit can come as a gift from an immediate family member.  The family member (donor) will provide a copy of their bank statement showing where the funds came out of their account and a gift letter will be complete between you and the donor.

The earnest money deposit is an important part of the mortgage process, but needs to be provide property to your Realtor to ensure less headache for you during your real estate transaction.

If you have further questions about earnest money deposits, please contact me at the information below.

Need to pre-qualify for your Michigan mortgage?  Simply click here to see how much and for what programs you qualify for.  No credit check required.

Jim Papatheodore
Mortgage Loan Officer
NMLS ID 131478

Mortgage 1 Fenton Team

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