Deposit

A sum of money that a buyer gives to the seller when making an offer on a home

A deposit is normally given to a seller to show that you’re serious about buying the property, even though it’s not required by law. It’s a good idea to put down as little as possible. If you’re going through a broker, the deposit will be placed into an escrow account for safekeeping, which also bears interest. If a broker isn’t involved in the deal, suggest opening a neutral escrow account. If the deal works out, your deposit is then applied to your total closing costs to purchase the home. If the deal goes sour and you’re at fault, you can lose your deposit. The deposit is also called earnest money.

See: Deposit receipt