How Much Earnest Money Do You Need to Buy a House in Orange County, NY?

By Ammar Iqbal | Real Estate Salesperson, eXp Realty

Once your offer is accepted on a home in Orange County, NY, one of the first questions buyers ask is: how much earnest money do I need, and what happens to it? Here is a simple explanation of how the deposit usually works here, so there are no surprises. You can also browse homes for sale in Middletown and Orange County while you plan.

What is earnest money?

Earnest money (also called a good-faith deposit or down payment deposit) is money you put down to show the seller you are serious. It is not an extra cost. At closing it is credited toward your down payment and closing costs.

When do you pay it in New York?

In New York, the deposit is usually paid when the contract of sale is signed, after the attorneys have reviewed and negotiated it. It is not usually due the moment your offer is accepted. The check or wire typically goes into an escrow account held by the seller's attorney or the listing brokerage, not straight to the seller. If you haven't hired an attorney yet, read why you need a real estate attorney in Orange County, NY.

How much is typical?

There is no fixed rule. The amount is negotiated and depends on the price, the loan type and how competitive the home is. In a multiple-offer situation, a larger deposit can make your offer look stronger, just like the tips in how to make a competitive offer in Middletown, NY. Your agent and attorney can tell you what is normal for the specific home.

Can you get it back?

Usually, yes, if you cancel for a reason the contract allows. Common protections include:

• Mortgage contingency: if you can't get your loan approved within the agreed time, you can typically cancel and get the deposit back.
• Inspection or attorney review: issues found before the contract is signed can be negotiated before any deposit is at risk.
• Title problems: if the seller can't deliver clear title, the deposit is normally returned.

If a buyer simply walks away without a valid reason, the seller may be entitled to keep the deposit. That is why it's important to read the contract with your attorney and get pre-approved for your mortgage before you start making offers.

Plan for it with your other costs

Your deposit, down payment and closing costs in Orange County, NY should all be part of one budget. Keep the money in an account that is easy to move, because lenders often ask for proof of where the deposit came from.

Thinking about buying in Orange County?

I help buyers across Middletown and Orange County plan every step, from pre-approval to closing day. Learn more on my Middletown, NY town guide, see what your current home is worth with a free home value estimate, or contact me with any questions.