The devil is in the details. Frankly, once you move in, the seller is at a disadvantage and would have to go to court to get you out. If, on the other hand, they do not get FHA approval, you will find that you have endured the expense of moving and its concomitant disruption, only to be forced to move yet again, although only after a protracted wrangle, unless you can obtain a conventional mortgage. Finally, I can't imagine that you will be allowed to move in without some sort of written agreement. The details of this agreement are where the devil lurks. Do NOTHING without legal advice. This is a squirrelly proposition at best.
Now my broker floated the idea to sellers broker regarding me moving in possibly rent-free. The seller's broker spoke to the builder and came back to us saying to ask our lawyer to draft an agreement. Currently the lawyer is in process of drafting an agreement - that will be the most important thing to see once it is on paper.
In terms of researching on the builder - i called up HUD to see if they have any claims or complains but they said there were none against the builder.
William - you have been playing devil's advocate and I like that! thanks for you advice. I will make sure the points/clauses that you have mentioned are somehow addressed in the agreement that my lawyer drafts. I will update once I have the draft. Please let me know if anyone can come up with some more points on this. Thanks a lot!
At this point, I would recommend talking to a real estate attorney before moving or signing anything else.
I am curious to know why he does not have FHA approval.
I am also concerned about you taking possession before the builder has fulfilled the terms he agreed to in the real estate contract. Please take the contract to a real estate attorney so he can interpret if the builder has defaulted and advise you on what your options are. If it were me, I would also do some more research (or ask the attorney to) on the builder.
Hopefully this is only a small glitch involving government red tape; but it could also be that something is terribly wrong.
Good luck to you; hope everything works out well.
You are getting a whole bunch of advice from people (including me) that don't have all the details. Unless you really WANT to get screwed talk to your lender AND A REAL ESTATE ATTORNEY.
Unless you can magically turn three months of condo fees into 17% of the purchase price, discount free rent there as part of the deal. On the other hand, would the three months savings ad up to what it will cost you to move in and out? If so and you want to take a crap shot at it be my guest. My darker side suspects that the three months free sounds too easy. Look for fish hooks beyond just walking away. For example, suppose that failing to buy will result in rent due for the period and still no FHA deal?
Your seller has a bigger problem. If no FHA deal, few first time buyers, little interest in more established households who want bigger, not smaller and few downsizers interested with so much "over 55" stuff avaiable so inexpensively these days. You well might just wait him out.
1. my landlord lets me stay on month-to-month basis and builder allows me to move in rent free. What should I do? stay in my rental or move to the new condo?
2. If I get to stay in condo for rent free for lets say 90 days - I save 90 days of rent and can MAYBE add to my downpayment to get conventional loan (currently I can only offer 3%) if the building does not get FHA approval and then MAY BE refinance to FHA??
Basically I believe the condo is a great investment and I am sick of paying a rental that equals a mortgage payment. But I also dont want to move in and then have to move out of the condo because of the FHA thing!
Good luck and best,
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But have you heard of anyone doing something like that where the builder lets you move in like in my case. Is he being nice or there might be ways that I can be screwed as a buyer. It is my first time buying a house...and Its just not going the way I had in my mind!