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alivebytime

Deposits in builder upgrades.

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I have picked out 30k of upgrades to be built into my loan.

 

The condo will be finished with construction on August 1.

 

I have to pay 7k in deposits for my upgrades

 

My LO told me if something happened and I wasn't able to get the loan ( escrow doesn't close for 4 months and they don't lock me into anything untill may) I lose the deposit money.

 

I chocolate my pants and now I'm questioning everything.

 

Advice?

 

 

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Builders require upgrade deposits in the event that you walk or don't qualify, it lets them offset the costs for other potential buyers. The other people may not want to pay 5k for quartz countertops or be fond of purple carpet. :grin: That said, they usually base it on a percentage of the base price... so if your options exceed, say 20% of the base price, you would either pay the overage or a portion of the overage as an additional deposit. In our case I think we paid 50% of the costs that exceeded 25% of the base price. I ended up cutting a second check for a little over 10K.

 

Did the builder inform you of this deposit requirement when you originally signed? Was it in the contract? I know a few years ago KB HOme tried to pull that on us but somehow didn't have it in their contract, so I refused to pay additional deposts, and they let it go. This time I knew about it and planned accordingly.

 

I definitely wouldn't be paying these deposits unless the LO was confident that I would be approved. I would also check with the builder (not the LO) to see what circumstances they would return any deposits, esp if you haven't received commitment yet.

 

Are you able to get the additional funds needed? Worst case, maybe talk to the builder to see if they can give you an extension or exception.

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I am totally fine with paying the deposits. What I'm afraid of is the interest rates rising in June and all of the sudden not being able to qualify for the final sale price of the property.

 

That would be the only thing that would cause me to not get the loan. Aside from losing my job or some terrible thing like that.

 

They said if I wasn't able to qualify for the loan I would lose my 25% deposit ($7,500)!

 

 

 

 

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If you are that borderline, I would consider looking into ways to reduce the cost of the loan, most likley via points.

 

If it helps, the market is in a funky place right now. It's hard to imagine rates climbing too much this year at this point, but anything is possible.

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I wouldn't worry about interest rates skyrocketing this year.

 

the Fed moves at a glacial pace.

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I am totally fine with paying the deposits. What I'm afraid of is the interest rates rising in June and all of the sudden not being able to qualify for the final sale price of the property.

 

That would be the only thing that would cause me to not get the loan. Aside from losing my job or some terrible thing like that.

 

They said if I wasn't able to qualify for the loan I would lose my 25% deposit ($7,500)!

 

 

your debt ratios are that tight?

 

loan officer SHOULD run you with a much higher rate kind of like a 'what if' scenario

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