Good Faith Money

AAA

DEFINITION of 'Good Faith Money'

The deposit of money into an account by a buyer to show that he or she has the intention of completing the deal. In most cases, the deposit amount will be a percent of the amount owed.

The money in an account can also be known as "margin" or a "performance bond", depending on the type of transaction.

INVESTOPEDIA EXPLAINS 'Good Faith Money'

An example would be a homebuyer depositing money into an escrow account. When this is done, the seller of the home knows that the buyer will fulfill the terms of the contract and make the purchase.

RELATED TERMS
  1. Escrow

    A financial instrument held by a third party on behalf of the ...
  2. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  3. Margin

    1. Borrowed money that is used to purchase securities. This practice ...
  4. Performance Bond

    A bond issued to one party of a contract as a guarantee against ...
  5. Bid Bond

    A debt secured by a bidder for a construction job or similar ...
  6. Retract

    The withdrawal of a bid, offer or statement before any relevant ...
Related Articles
  1. Credit & Loans

    Understanding The Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
  2. Chart Advisor

    Profit From Holiday Spending With This ETF

    As Americans finish purchasing the last of their holiday gifts, the consumer discretionary sector will continue to be one of the primary beneficiaries.
  3. Options & Futures

    What are the differences between divergence and convergence?

    Find out what technical analysts mean when they talk about a market experiencing divergence or convergence and how they affect trading strategies.
  4. Options & Futures

    Futures Quotes Explained The "Easy" Way

    If there’s a security whose price fluctuates, there can theoretically be a futures marketplace for it.
  5. Budgeting

    What are the pros and cons of digital gift cards (e-gift cards)?

    Examine the pros and cons of gift cards. Learn about protection in case of loss, monitoring spending by teens and wasted small balances.
  6. Options & Futures

    Why is the Accumulative Swing Index helpful for traders and/or investors?

    Find out why J. Welles Wilder believed that the accumulative swing index could be used in the futures markets to indicate long-term trends.
  7. Options & Futures

    Stock Futures vs Stock Options

    A full analysis of when is it better to trade stock futures vs when is it better to trade options on a particular stock. A quick overview of how each of them works and why would a trader, investor, ...
  8. Options & Futures

    The Potential Of Low-Priced Options

    The benefits of trading low-priced options, and learning how to pinpoint them, can be a very profitable strategy for an options trader.
  9. First time stock investors may ask, is there any way to buy insurance on stocks to prevent losses?
    Options & Futures

    Stock Safety: Top 3 Ways to Limit Your Losses

    First time stock investors may ask, is there any way to buy insurance on stocks to prevent losses?
  10. Investors can use derivative securities to effectively buy insurance on their individual holdings or on their portfolio as a whole.
    Options & Futures

    Can You Buy Stock Insurace? 3 Strategies to Limit Stock Losses

    Investors can use derivative securities to effectively buy insurance on their individual holdings or on their portfolio as a whole.

You May Also Like

Hot Definitions
  1. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  2. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  3. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  4. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  5. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  6. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
Trading Center