An EMD stands for “earnest money deposit.”
When purchasing a home, a buyer’s EMD represents his or her good faith in completing the transaction, making it also known as a “good faith deposit.” This can ensure a seller that a buyer is serious.
If the deal falls through, can I get my EMD back?
It depends. This is typically determined by what is listed on the sales contract. The contract stipulates everything between a seller and a buyer, including the EMD, which is why you should work with a real estate professional to ensure you are protected.
What is the difference among EMD, Down Payment, and Closing Costs?
A down payment is used in conjunction with a purchase loan to arrive at the sales price (more loan, less down payment; more down payment, less loan). Closing costs are incurred to purchase a home and receive a loan. An EMD is an upfront deposit that is placed in an escrow account at the beginning of a transaction.
Overall, cash to close is calculated with the following:
+ Closing Costs
+ Down Payment
– Seller Credits (if applicable)
= Cash to Close