There is risk to you and the seller. For example what if the 2nd mortgage does not approve the sale, then what?
Work with your agent and see what solutions are available to you and the possible risks.
Thank you again for the responses, we can use all the help we can get!
To actually answer your question though...yes it is possible...but proceed with extreme caution. Not knowing the specifics of your rental agreement conversations means that we're speaking vaguely here, but be very wary of tying rental deposits into the ultimate purchase. Uta also makes a strong point about us not being able to give too much advice (so as not to overstep bounds).
Best of luck...
As far as your question is concerned. I personally am not a fan of early occupancy, but your situation is unique. I am assuming you gave notice on your current residence in reliance on being able to close escrow on your new home, and the only reason why you are not able to close is because of the delayed discovery of the second mortgage. I am also assuming that you are represented by a real estate agent, which makes it inappropriate for me to suggest a solution other than that your agent's broker should contact the listing agent's broker and find a solution and work this out. There is no way of predicting how long it will take to secure the approval from the second mortgage. There is not even certainty that it will happen at all. The way I see it, having this second mortgage to deal with also means that the approval with the first will have to be renegotiated unless a third party will pay what it takes to get approval from the second mortgage. Even if the payoff to the first will remain the same, the first will still need to re-approve because the estimated closing statement on which the first approval was based will have to be revised to reflect the payoff to the second mortgage.
What does your agent have to say about all of this?
Good luck with that.
And WHAT?? NO ONE, not the listing agent, not the title company, nor the seller could have disclosed this earlier? What??? do you have other threads working on this story?