Earnest money is applied to the ___ at the close of the sale.

a.

principle

c.

down payment

b.

interest

d.

closing costs

Earnest money is applied to the down payment at the close of the sale.

down payment

Explanation:

When on a purchase of a land or a property or any other commodity, the buyer has to deposit some secured amount to the seller which is known as Earnest Money. It is not the complete payment of the product but a small deposit which insures the future intention of paying in full.

It is applied to the Closing cost at the close of the sale can also be treated as down payment. In the real estate business it is easy to loose interest in the lands therefore Earnest money act as a security money for the seller.