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The downpayment is equity offered with a sales contract to secure a deal. In some cases it may be earnest money, but in larger deals such as real estate, a separate earnest money payment secures the deal in the approval stages while the downpayment is paid later, if not at the close.
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In a real estate transaction, the downpayment determines the size of the mortgage. A larger downpayment suggests a buyer who is more likely to get his loan approved.
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