Dangers Of Moving Into A House Before Closing The Purchase
It's possible to move into a house before closing the purchase contract; this is known as taking early possession of the property. However, it isn't always a good idea for everybody concerned. For example, if you are the buyer, taking early possession may make the following issues more complicated for you:
Fixing Last Minute Defects
Once you move into the house, you also lose the leverage (the need to close fast so that you can move in) that you could have used to repair last-minute defects. It is not uncommon to unearth last minute issues during the closing stages of a property purchase. For example, you may realize that the water flow loses its pressure when the weather gets too cold. It's much easier to have these issues resolved before moving into the house.
Clearing Unresolved Issues
If you plan to move into a house only after closing the sale, the seller may be motivated to do everything possible to clear unresolved issues so that you can close the deal and move in. A motivated seller may work day and night to clear any liens, such as pending taxes so that you can close and take possession of the property. However, the seller may lose this motivation once you move into the house, and it may take longer than usual to clear out these issues.
Negotiating Closing Costs
Some sellers offer incentives to buyers to get them to close purchase deals as fast as possible. A common incentive is to share the closing costs with the buyer. In fact, buyers routinely request sellers for this incentive. However, the seller has no reason to share the closing costs with you (or offer you any other incentive) once you have moved into the house.
Gap in Insurance Coverage
Lastly, moving into a house before closing the deal may also leave you with a gap in insurance that may put your properties at risk. This is because home insurance for your new house only kicks in after you are done closing the purchase, and your lender's property coverage won't cover your personal belongings. Your current home insurance (if you have one) may offer you some protection, but it won't be enough. In case something (like a fire) damages your belongings, you may be left out in the cold with nowhere to turn for help.
Therefore, hold your patience, and move into your dream house after closing the contract. If you are in a hurry, talk to your agent for advice on how to speed up things instead of moving into the house prematurely.
