Deposits and closing costs
What these two are, when each one happens and how they differ. This guide explains the ideas and does not quote amounts, since they vary by home and contract.
The deposit
When you sign the purchase contract, you place a deposit with the builder or an escrow agent. It is part of your purchase, and it is credited toward what you owe at closing. Some builders ask for more than one deposit at different points, such as at signing and at the design center. The contract states how much, when, and what happens to it if the sale does not go through. Read that part closely.
Closing costs
Closing costs are the fees to complete the purchase, apart from the price of the home. They commonly include lender fees, the title company’s charges, recording fees and prepaid items such as the first part of property taxes and homeowners insurance. Your lender gives you a written estimate, and the closing disclosure shows the final figures before you sign.
Who pays what
Some closing costs are paid by the buyer, some by the seller, and some builders offer help toward them under their own terms. I confirm what applies to the home you choose, in writing, so nothing is assumed.
Money for the home itself
The down payment is separate from the deposit and from closing costs. Your lender explains your options and what is available for your situation.
Questions to ask
Is the deposit refundable, and under what conditions? Is it held in escrow? When is each deposit due? What does the lender estimate for closing costs? I help you ask these in a clear way.
Common questions
Is the deposit an extra cost?
No. It is credited toward your purchase. It is money you pay earlier.
Can closing costs be financed?
That depends on the loan and the lender. Your lender can explain your options.
Will I see the final numbers before I sign?
Yes. A closing disclosure lays out the final figures before closing, and I am glad to read it with you.