buying your home
Offer and Earnest Money Basics
Offers are made in writing. Once your offer is approved, you may be expected to submit earnest money. Earnest money is:
Money that is given directly to the seller as a down payment on your home.
Money that is placed in an escrow account until the purchase is complete.
Money you will automatically receive back if the sale doesn't go through.
The correct answer is "B". Earnest is "good faith" money that you as the buyer deposit into an account to show you are committed to the contract. It is not the same thing as a down payment, but it may be applied to the down payment once the purchase is made. In some cases, sellers are allowed to keep the earnest money if the sale falls through.