Dahianara Lopez and her husband Paulo Echeverry run a food truck outside of Orlando. "We work together every day," she says while cooking up Colombian sausages on the truck's big stainless steel grill.
They say by putting in long hours over several years they were able to save up a down payment for a house.
"We think that renting is like we are wasting money, you know?" says Lopez. "So we want to to buy a house, to have something that that we can say is mine."
Late last year, they signed a contract to buy a new home before it was built for about $500,000 and put down a $25,000 deposit.
But since then mortgage rates have seen their biggest increase in 40 years, from 3% to around 7%. A big catalyst for this increase can be traced to the Federal Reserve raising interest rates to combat inflation.
Pandemic delays have resulted in many new homes taking a year or longer to get built. So now it's much harder for thousands of people like Echeverry and Lopez to be able to afford the new homes they agreed to buy. In their case, the higher rates would add about $1,100 a month to their mortgage payment.
The couple has been very scared that they won't qualify for a mortgage anymore and will lose that big deposit.
"The sales guy, he always tells us we're going to lose the deposit if we don't buy the house," Echeverry said when the couple first spoke to NPR. "Even the area sales manager... she told me, too, that we're going to lose our money."
Some people have already lost their money. Karen Jensen works as a school nurse at an elementary school in Tigard, Ore. She and her husband wanted a bigger house for them and their three kids.
"We put just a little over $15,000 down as a deposit," she says.
But after interest rates jumped so much higher they decided to back out of buying it, and she says the builder kept their deposit. At first she felt sad but okay about that. They signed the contract and put the money down after all.
But then she saw the company put the house back up for sale for $90,000 more than she would have paid for it. Prices in the area had risen while it was getting built. And she says it quickly went under agreement and is listed as sold on the builders website.
"It felt really gross to see that," Jensen says. "So not only do you got our earnest money, our 15 grand, plus they will get more money at the end of the day in general."
Homebuilders do not seem eager to talk about buyers losing their deposit money. The National Association of Home Builders declined an interview and the Florida Home Builders Association didn't respond to requests for comment.
"Most builders are going to be very cautious about just blanket giving a deposit back out of the goodness of their hearts," says Paul Schwinghammer, the president of the Indiana Builders Association.
He says it's important to realize that right now this massive increase in mortgage rates has buyers and builders both scrambling. That's because so many buyers are getting cold feet. One industry survey found that buyer cancellation rates nationally in October were three times higher than normal.
So Schwinghammer says builders need to try to make buyers follow through on purchase contracts they signed since it's a big risk to get stuck with a lot of unsold homes, especially for a smaller builder.
"If there becomes this word on the street that Bob the builder is giving everybody their money back, Bob's gonna be out of business pretty quick."
But he thinks builders should make an exception in cases like Karen Jensen's where the builder can sell the house to someone else for a lot more money. "If the builder profited from re-selling that house... he at least ought to give the deposit back to that customer," says Schwinghammer. "That's just an ethical decision on my part."
Some builders are making exceptions, too, for people who can't even qualify for a mortgage anymore with these higher interest rates.
Jody Kahn with the John Burns Real Estate Consulting Group surveyed about 100 builders about how they were handling the earnest money deposits that buyers are required to make. She says for customers who can no longer qualify for a loan "the majority of the builders are willing to give a refund." But not all builders.
"There were some builders who say they're just keeping the deposit," Kahn says. "Their contract allows for it... some are saying we'll just keep it."
Buyers often don't have a lot of recourse.
"Everything in these agreements is drafted in favor of the developer," says Craig Rothburd, an attorney in Florida who specializes in consumer protection cases. He says the buyers sign a contract which states they can lose their deposit.
He says, though, it never hurts to ask a builder for your deposit back, especially if losing the deposit would be a real financial hardship, "Whether the developer has a heart is kind of what it comes down to."
Karen Jensen in Oregon has asked the builder for her deposit back but hasn't received an answer yet. The company said in a statement to NPR that it wouldn't talk about any particular case but said there were costs associated with selling a house to a different buyer and that, "any apparent windfall is not what it may appear to be."
Back in Orlando, Paulo Echeverry and Dahianara Lopez have been worried about losing their $25,000 deposit.
"To buy a house... it was our dream," said Lopez. "But it's completely a nightmare."
But after NPR contacted the homebuilder, a large public company named Dream Finders Homes, it said the couple would not lose their deposit.
The company declined an interview but said in a statement that if a buyer defaults on a contract to buy a home, "we have a general policy that... we will credit them one hundred percent of that deposit towards a future DFH home."
And the couple tells NPR the company is now offering to spend about $10,000 to buy down their interest rate. Some builders are doing this since a lower rate helps people to be able to purchase the homes.
"That's pretty good!" Echeverry said with obvious relief. "The company wants to work with us to close our house."
He says that's going to bring their interest rate down from around 7% to just a bit below 6%. Lopez says that will still be a stretch, and a higher rate than they were expecting when they agreed to buy it. "But I feel excited also to get the house."
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