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 are serious about buying the property, even though it is not required by law. It is a good idea to put down as little as possible. If you are going through a broker, the deposit will be placed into an escrow account for safe keeping, which also bears interest.

If a broker is not 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 are at fault, you can lose your deposit. The deposit is also called earnest money.