February 6, 2019
When should a first-time home buyer expect to be able to move into the new home they have purchased with an FHA mortgage? Can you realistically expect to move into your new home on the day scheduled for closing?
Believe it or not, the answer might be no. It is in the borrower’s best interest NOT to schedule move-in day at the same time your home loan closes.
FHA Loans, Closing Day, And Anticipating Change
Do you know what the day of funding is? For home loans, whether for first-time home buyers or experienced borrowers, the day of funding is when the loan funds transfer to the seller from the lender.
This should happen before you take your keys the the property. Know the exact date of funding and you can accurately count interest accrued and other factors, but you could also plan your closing activities knowing this date.
There is another concern-your new home must also be officially recorded in your county. While it is possible that this could be scheduled for the same day as your closing date, don’t assume this will happen.
And then there is the seller’s prerogative to stipulate a certain length of time the home will remain occupied by the former owner-which may include a period of time that extends after closing. Whatever you have agreed to in writing will apply, so it’s best to make sure you know the fine print.
In most cases the FHA borrower has up to 60 days to move into the home and begin using it as the primary residence under the terms of FHA home loan agreements in the occupancy requirements section.
Moving Day And Closing Day Should Not Be The Same
Even if you have cleared all the hurdles mentioned above, closing day is not a good idea as moving day.
This is because any number of factors may conspire to delay your closing date-borrowers may have to reschedule closing due to personal circumstances, the lender may need to change the date due to schedule conflicts, or any other set of issues that may require moving the closing day to another time.
It’s not safe to assume you have the freedom to move into your new home until you have the keys and know your seller is moved out of the property.
Ask your loan officer what is typical in terms of waiting times to move in-your housing market may have customs that are unfamiliar to you, but you should definitely make plans with the lender’s advice.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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