Question:

Is a down payment receipt the same as earnest money receipt?

Answer:

A down payment receipt, or earnest money receipt, is required by mortgage companies in the loan application process. If you are wiring your down payment in the day of closing, make sure you obtain a down payment receipt. There are cases when the seller did not receive the down payment, and the buyer did not keep the receipt, hence the whole agreement fell to pieces.

Earnest Money Is Different from Down Payment

Earnest money sometimes coincides with the amount of down payment funds and is usually held with a third party until the mortgage loan closes. If the borrower walks away from the loan, they lose the earnest money deposit. For example, the earnest money deposit may vary between 1 and 3%, and the borrower is getting 100% financing in which case no down payment is required.

The earnest money receipt shows the amount the borrower is paying towards the purchase of a property. It also shows when the full amount is due. The receipt should also contain the address, name and number of the person holding the loan deposit.

The amount of down payment or earnest money depends on the mortgage company. Earnest money may be only a part of the escrow funds or down payment. It is advisable that you keep your deposit funds with a reputable company - escrow or legal company.

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