Can I move into a home before settlement?
This is a tricky question, because the answer and my advice are complete opposites. Sometimes, whether it's due to an expiring lease, logistics, financial benefit to a seller, or even in a rent-to-own situation, the question comes up, "Can I move into a home before settlement?".
The easy answer is yes, you can. So long as buyer & seller are in agreement, you can move into a home prior to settlement and the official sale. But just because you can play with fire doesn't mean you won't get burnt!
While you CAN move into a home before settlement if the seller agrees, my advice will always be to avoid the situation if possible. Here are a few reasons it's not a good idea:
- If the mortgage process isn't 100% complete, there's ALWAYS room for the loan to be denied. What if a primary wage earner is laid off or injured after moving into the home but prior to settlement? A change in job status or income could put a mortgage loan in jeopardy, or even in a best-case scenario cause major delays.
- If a buyer moves in prematurely, they may find things they don't like about the home that they didn't previously consider. Worst case, they could decide they really don't want to go to settlement on this home.
- On new construction, moving in prior to the issuance of a CO could violate construction loan terms or contractor/builder contracts.
- If a buyer has 'minor details' that need to be worked out, such as 'simple' credit fixes, there's no guarantee they'll ever be worked out, and it's not as simple as a seller saying "Get out!"
- Once someone moves into the home, the seller may have to go through some major legal hoops to make them leave the home. It's not as easy as just saying "Get out!" once you agree to let someone move in.
- A buyer moving in prematurely will usually view the home as theirs - along with that feeling may come "improvements" to the home, which the seller could be stuck with if settlement never occurs.
Sometimes, though, moving in early can be beneficial to both a buyer and seller, and sometimes it works out just fine. If you do decide to let someone move into your home before settlement (or if you're moving into someone's home prior to settlement) it's imperative to work out all of the details, IN WRITING, with Realtor representation on both sides, along with the help of a real estate attorney. Provisions should be made for all worst-case scenario's to protect both buyer and seller.
So can you move into a home before settlement? Sure you can. But beware! Even when working with the best of professionals through the home buying/mortgage/closing process, there are many ways a deal could fall apart that are sometimes out of anyone's control. It's best to wait until loans are complete, money is wired, and documents are signed prior to changing occupancy.
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