You have two safe choices.

Talk about difficult. There are so many decisions to make when you elect to have a new home built. Each homebuilder approaches the process a little bit differently, so it's not like you can turn it into an easy process. But, before you even start on all the details to decide for interior elements, as well as the outside building elevation, you've got to make a big first-step choice.

Should you place your building deposit in escrow or release the funds to the builder? The bottom line is that you actually do have a choice in the state of Florida. Here's some information to help you make the right decision.

Is it the same thing as earnest money?

Not necessarily. Let's say you're looking to have a new home built in a subdivision where there is one or several large homebuilding companies that are responsible for the construction. It's likely that you've toured one of their model homes, so you have a solid idea of what your own version will look like.

The homebuilder's sales agent will require you to make an earnest money deposit. It's very important to understand that this is going to be only a percentage of the total deposit the homebuilder will require to start construction on your home. An earnest money deposit is just an amount of money you pay to hold a lot, and to show the homebuilder that you are a serious buyer. Ultimately, this earnest money will count as part of your total homebuilder deposit.

A homebuilder deposit is the amount of money you will pay upfront, when you actually enter into the contract to have the new house built. Why is this necessary?

The homebuilder is building this home specifically for you. They're going to customize it with your choice of countertops in the kitchen and bathrooms, interior architectural elements, windows, and even perhaps add-ons that can drastically change the cost – and the desirability of the house – ¬in case you suddenly decide you no longer want it. The deposit creates a level of protection for the homebuilder, so they're not left with a house that may not appeal to any other homebuyer.

It's for this reason that a homebuilder deposit is almost always nonrefundable. Again, each homebuilding company will decide on the amount of the deposit. Generally, it's calculated as between 5% to 10% of the base price of the house. If you go with expensive add-ons, such as a bonus room or highly upgraded interior elements, the homebuilder may elect to require up to 50% for these choices.

Where does the deposit go? It's your choice.

Under Florida law, it's up to you to decide whether to have the homebuilder deposit placed in escrow, or to release the funds to the builder. It's a question of trust and faith.

If you have a reason to be concerned about the homebuilder's reputation, you'll probably just decide to put the money in escrow. It'll be safe there. And while it might seem this would always be the best choice, it's important to know that there can be an extra cost to you as the buyer for this added peace of mind.

Yes, it's your legal right to have the money placed in escrow. This money, though, is what the builder would be using to start the construction process on your home. It's for this reason that Florida law also protects the homebuilder by giving them the right to charge you the cost they incur to borrow that money from a financial institution. After all, the money's got to come from somewhere.

The law keeps this fair. The homebuilder must deduct any interest obtained from the escrows while the deposits are being held in the bank.