Can you move in before closing on new construction? In most cases no, you can only move into a new construction once you’ve closed on the house. One of the things to note is that you could face issues or penalties from your lender if you move in before they convert the construction loan to a mortgage.
A new construction home is a property where you live after the construction company has completed the process.
However, it happens in different ways. For instance, you may purchase an empty land from the developer and choose another home design option. After selecting the design, the builder will start constructing the home.
Building or moving into a new home with the ideal layout, latest features, and modern finishes is an exciting and eagerly anticipated moment in anyone’s life.
It provides you with what you want in your home without settling for outdated features or a less-quality layout of a previously owned home.
Purchasing a new construction property adds an extra layer of anticipation but comes with its considerations and questions. One common question arises: “Can you move in before closing on new construction deal?”
This post will walk you through everything you need to know about closing on your new construction home.
What Does Closing On A House Mean?
Closing on a house refers to the final stage of a real estate transaction where ownership passes from the seller to the buyer. It is known as settlement or escrow.
Home closing is executing the final paperwork and ensuring all purchase contract conditions have been met before ownership of the property is transferred from the seller to the buyer. This is when all necessary legal and financial documents are signed, and funds are exchanged.
The closing documents will include a final loan statement, a deed transferring ownership of the property, and various disclosures required by state and federal law.
The buyer and seller must sign all the necessary documents, and the closing agent will record them with the county clerk. At this point, you will officially own your new home.
Why Would A Buyer Want Access To A Home Before Closing?
While debating on the question Can you move in before closing on new construction? It would seem strange for a buyer to want to move in and make themselves feel at home before the deal is formally closed because, after all, the property still needs to be theirs. Consequently, why did they even ask?
Well, the eagerness to move into a new home can prompt the question” Can you move in before closing on new construction deal”?
This desire has several reasons, ranging from excitement to practical considerations. Some buyers might want to start personalizing and decorating their new space before the official move-in date, tackling repairs. In contrast, others might have time-sensitive reasons, such as relocating for work.
The question Can you move in before closing on new construction deal? is frequently associated with foreclosed properties requiring major assistance before someone can move in, such as when the home needs a heater, toilets, or other kitchen appliances.
Sometimes, a buyer may want to pop by for an hour or two to measure or determine what color paint would look best in the bathroom.
The seller can coordinate a visit with their real estate agent to accommodate less intrusive inquiries like this one so that everyone feels comfortable.
The Timeline For Closing On A New Construction Build
Still on the question: Can you move in before closing on new construction? It is essential to know that closing timelines can be different, depending on factors such as location, builder policies, complexity of the transaction, and might take longer than a resale home due to potential construction delays and additional paperwork.
Most new homes take 6-9 months to construct, depending on the level of the buyer’s customization.
When closing on a newly built home, there are usually many things to consider. Knowing what to anticipate and preparing beforehand helps make the process go more smoothly.
Legal And Financial Implications Of Moving In Before Closing In On A New Construction Home
Before considering asking Can you move in before closing on new construction deal? It is essential to have an understanding of the legal and financial implications.
Buyers should consult their legal advisors and lenders to ensure that moving in before closing aligns with their contractual obligations and financial capabilities.
There are significant legal and financial factors to consider when a buyer wants and is granted access to the home before officially closing on it.
It is quite understandable when a buyer has to move in a few days early or wants to work on the house before closing, but that doesn’t mean it’s a good idea for the seller to let them in.
Below are some legal and financial factors to consider before requesting a move-in:
1. Mortgage Underwriting Problems
One of the significant risks for the buyer is that the sale may not go through — and a lot can go south on the closing day.
A typical setback for individuals still asking the question: can you move in before closing on new construction? is an issue with mortgage underwriting, such as the buyer’s application for a house loan not being approved. This automatically means there is a problem, and the buyer must leave the home if they moved in before the failed closing.
In real life situations, the buyer would go to the seller right away, but they could decide to be difficult instead, forcing the seller to take legal action to persuade them to leave.
2. Having To Pay To Undo Unwanted ‘Improvements’
Suppose the transaction doesn’t go through, but the seller has already permitted the potential purchasers to make repairs or cosmetic changes to the house.
In that case, they can be stuck with an unfinished repair or a choice that makes it more challenging to sell the house to a new buyer.
Sometimes, the seller may need to undo these “improvements” to return their home to how they like it or into a sellable condition. Thus, incurring more cost.
3. Buyers May Request More Repairs
The more “needs” for repairs a buyer may run into, the longer they live in a home. The seller, especially if they already negotiated fixes following the inspection and appraisal, wants to avoid a buyer adding more repairs to their list of things to do to seal the transaction.
4. The Seller Still Insures The Home
While considering the question, can you move in before closing on new construction deal? The fact that the seller’s insurance still covers the house should be known to home sellers even if the buyer moves in or begins improvements before the closing date.
The seller and their insurance coverage will be responsible for any damage the buyer makes to the home or injuries sustained by visitors while on the property.
Can You Move In Before Closing?, Exploring The Possibilities
Many individuals ask, can you move in before closing on new construction build. Well, the answer is that you can only move into a new construction once you’ve closed on the house in most cases.
First, no one can live in the home until the certificate of occupancy is completed, which occurs after the final inspections and appraisals.
Secondly, there are usually issues or penalties from your lender if you move in before they convert the construction loan to a mortgage.
Finally, the builder may need to forego any final additions or finishing touches and request payment in full if you decide to move in early.
However, in some cases, builders might allow buyers to move in before the official closing. This is often called “early occupancy” or “pre-possession.” This arrangement is typically subject to specific terms and conditions outlined in a formal agreement.
Builders who permit early occupancy usually have established policies and contracts to protect both parties’ interests. These agreements outline the responsibilities of the buyer and builder during the pre-possession period.
Things To Know Before Closing On A New Construction Home
In debating the topic can you move in before closing on new construction? It is well understood that purchasing a new home is an exciting time for buyers but a stressful process for many buyers. However, It is crucial to set your expectations for your home builder.
Whether you are a first-time buyer or want to move into a newly constructed house, you need to understand the closing process of a new construction home before popping the question: can you move in before closing on new construction home.
Below are some basic and essential things to note before closing on a new construction home:
1. Develop A Solid Plan
Closing on a new construction home requires careful planning and preparation. The closing process occurs two months after the contractor installs your countertops.
However, it also depends on your home size and the surrounding community. It is recommended that buyers check in on their lenders if they want to finance their homes, especially after receiving the closing schedule.
This ensures the bank or lending company receives enough information or documents to process the loan.
Remember, performing an appraisal for the type of arranged financing is essential. At the same time, you need to secure your homeowner’s insurance policy.
2. Check The Details One Month Before Closing
Checking the details 30 days before closing can help you avoid complications. Keep an eye on your email inbox for a confirmation letter that includes essential information on the title company to carry out the closing process.
Because a title company requires funds 24 hours before closing, the staff will email you all the wiring instructions. This letter includes a list of utilities, and you can also set up or transfer these services to your new construction home.
3. Analyze The Closing Disclosure
Analyzing and reviewing the closing disclosure is necessary when buying a new construction home with a mortgage loan.
Contact your bank, lending company, or creditor to provide all the required documentation.
On the other hand, if you want to purchase the home by paying cash, ask the title company to provide you with the disclosure. The closing disclosure is an important document that highlights the down payment, the money you have already paid, and the closing costs.
Make sure you compare fees mentioned in the closing disclosure and analyze the loan you received from the bank or lending company. The purpose is to avoid complications and discrepancies and correct errors before completing the closing process.
4. Decide On The Payment Method
The law prohibits buyers from using personal checks for new construction home closing. Therefore, you have to decide the payment method. For instance, you can use the wire transfer method or bank cashier’s check.
It is crucial to make arrangements a few days before the closing process if you want to use the wire transfer option. Work with your bank and the title company to prepare before closing.
On the other hand, if you want to use the cashier’s check option, work with your bank to make arrangements. You can request your bank to provide you with the cashier’s check. Make sure you check the amount mentioned in the closing disclosure.
Few Tips For Making The Closing Process Smoother
Even though it can be a long process to wait for the builders to finish construction
and close on your new home, there are ways you can hasten the process and get
in your new build quicker.
1. Making Sure Documents Are Error-Free
You’ll need to have several documents on closing day, including proof of homeowner’s
insurance and the closing disclosure.
Double-check all documents beforehand to detect any errors in the spelling of your name or loan details. If you need to request corrected records, it could delay your closing and move-in date.
2. Negotiate A Lease Back With Your Current Home
If you sell your current home before closing on your new build, you can request a leaseback from the new owners before they need to move in.
A leaseback means you enter into a short-term lease agreement with the new owner and pay rent for a few weeks or months until your new home is ready.
The option will only sometimes be available to sellers. However, negotiating this
arrangement can save you the trouble of finding a new place to live or storing
your belongings while you wait for your new build.
The option to move in before closing on a new construction deal is a possibility that varies based on builder policies and individual circumstances.
Many people need help to streamline the closing process on a new construction home. However, if you make a solid plan, prepare well, and follow a step-by-step approach, you can achieve your goals.