I'm NOT a contractor but having issues with one. Need ASAP advice

[Megan Moore]

We are at the end of our home-building process. My husband and I are the homeowners. I'll break down the math: 

 $262,850.50 - contracted price of the house with contractor
   $53,000.00 - Mechanicals that my husband subcontracted out (in agreement with the contractor- (Well, HVAC, plumbing, septic, insulation, gutters, gas tank)
But we went over in overages and extras to the tune of $5665, so we'll add that to the contracted price.
Leaving the final amount owed to contractor as $209,850.5 (262850+5665-53000)

$194,744.50 - to-date amount paid to contractor 
Leaving the balance "owed" (per the contract) at $20,770.5

"owed" is in quotes for the following reasons:
1) the builder is a Maryland builder. Our architect is in Delaware and we built in Delaware. The contractor/builder put the foundation in incorrectly (to MD standards and not DE, per the blueprints) and had to redo parts. The quoted price was $5,200 and he is attempting to charge us $10,700 (original plus redo).

2) At the end of the project, before the deck went in, our contractor said that we didn't have the funds available to put the deck in so he wasn't building it. The deck was contracted at $10,600. Halfway through the build the contractor said it looked like it might be tight and recommended we downsize the deck to $8,000.

3) The builder says we still owe $5,000 for the extras, even though my husband has receipts for his work and did not go over our budget for the above listed items.

So my questions are:

1) Who is responsible for that error in the foundation? He says he's not, but I say he absolutely is.
2) He agrees that he will be paid the $20,770.5, but that number included the original contracted price of $10,600 for the deck, not the downsized version that we got. What should happen to that $2,600 difference?
3) We have many fixes that need to be done already. Most he has already verbally agreed to. Would any of you sign a paper agreeing to do the repairs in exchange for receiving the last draw?
4) Am I being petty? And before you answer that, let me just say that our contract specifies solid wood doors throughout the house and he charged us $400 for the "upgrade" to solid wood when he had initially ordered the hollow panel. I want to withhold that $400 too, but my husband won't let me.

We go to settlement with the bank on Wednesday 5/17 and they want him paid ASAP, but require a "Paid in Full" letter signed before we release the check to him, and idk what to do.

Thanks in advance.