Of course one big question, I get when I am working with a first time home buyer is: “What do I need to do for you to write up an offer?”
Well, if you have your pre-approval for a loan in hand, the next thing to do is write up the offer with your hand money or earnest money. These funds are used to show the seller that you are serious. In many situations, this money is returned when the terms of the contract are not met. If the buyer, after making an offer, would decide to walk away because he found another house that he likes better, then he is going to loose that money (as one example). A sales agreement is in many cases written up with contingencies on mortgage approval and home inspections or other reasons to protect the buyer and allow him to receive his hand money back if the deal does not work out. The more funds you put down, the more serious your offer. Have your agent guide you for the best amount for the price of your home. The seller can ask for more hand money. It is all negotiable.
Keep in mind this money will go towards your closing. Your loan officer will calculate your estimated fees for you, letting you know the balance needed for closing.
Here is an official term from on of my real estate references:
“Earnest Money: It is customary for a purchaser to provide a deposit when making an offer. This deposit, usually in the form of a check is referred to as earnest money or hand money. The deposit is evidence of the buyer’s intention to carry out the terms of the contract in good faith. The earnest money is given to the broker, who then handles the deposit as required by the licensing law and the real estate commission’s regulations.
No mandatory or standard amount of earnest money is required. From the seller’s perspective, the amount should be sufficient to discourage the buyer’s default, to compensate the seller for taking the property off othe market and to cover any expenses the seller might incur if the buyer does default.”
-Quoted from Modern Real Estate Practice in Pennsylvania.