mortgage rate- house is ready but builder not ready to close (Sunnyvale: 2009, lease)

[pmulay]

Hi,
i bought a new home in a KB home community last year in July 2008 in Sunnyvale and the house was scheduled to deliver in Feb 2009. In Jan 2009 the builder rescheduled the delivery of the house to Sep 2009. The house is already constructed and ready but the houses close to ours are yet to be constructed and the argument from the builder for not closing on the house is that they neighboring houses are not yet constructed and it might cause safety hazard if they let us move in. Now they have pushed the closing to Oct 2009.
We are getting frustrated with the constant delay. We are not only paying more rent now since we have moved to monthly lease, we are loosing up on the low mortgage rates which have moved from 4.8 to almost 5.3 for a 30 year fixed.
Is there anything we can do about this? Will the banks be ready to lock in the rate now even though our moving is in Oct 2009? Should we ask the builder to help us lock the rates at least somehow? What are our options in the current situation?
Thanks,

[california5]

We had a similar issue with KB a few years back. What we found out afterwards was that we could have locked in our rate by paying a point. What they are doing does not sound fair or legal, I would suggest seeking legal advice.

[bhcompy]

mortgage brokers will lock in rates for a fee. i would talk kb into paying that fee for you since they're desperate to clear inventory and sell houses

[suzie02]

Read your purchase agreement. What does it say about delays? You may be able to get out of this house. How much earnest money did you give them? There are plenty of homes available.
Also the house may not be worth what you agreed to pay for a year ago. You may wait for it and then not be able to close on it because it doesn't appraise.
Good luck.

[SOON2BNSURPRISE]

When we bought our home in Arizona the builder had a year to complete the home. They did it quicker than that which was good I guess. Not too sure on this since we never got a job in the area. Anyway, what we were told was if they could not deliver within one year we could walk away from the deal and get our cash back. Read your contract to see if that is the case with you. Also see if they have an inhouse lender that would offer a better rate. Our builder had their own financing deparment and the rates were very good.

[pmulay]

Thanks for all the feedback everybody. Last month the morgage rate for 30 yr fixed was below 5 and now it has jumped to 5.5 approx. The period for completion of the house mentioned in our contract is 18 months and it was signed July 2008. They are still telling us that they are trying to close it by Oct of this year but there are no signs of that happening. My guess is NOv or Dec. We are not only going to loose the first time home buyer credit available for 2009 but we are also loosing on the interest rate.
The rates seem to be moving down again slowly but there is no certainty.
We like the house and we got a good price for it but this situation is a little bit frustrating. Do you think we should lock the rates now and ask the builder to pay for the points that we have to pay to lock the rate?

Thanks,