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What To Expect At Closing On Your First Home Purchase
Preparing You For Everything For The BIG DAY!
2022 is a tough time for first-time homebuyers. In the spirit of what I try to do here on the show, bring you practical positivity, I am going to assume that no matter what phase you are in this process, you have no clue what’s going on at the very beginning of Phase 1 or 2, you are a little bit on the way or Phase 3, you are getting ready to go out there and start writing offers. No matter where you are in your home buying process, you are going to need this show because someday, you will be closing on a home. We are going to fast forward to a day or two before you get the keys to your new home to help you get prepared for what to expect, for our favorite word in real estate, closing.—
What is happening, my How to Buy homies? I am crushing the confusion and bringing clarity to the entire crazy home buying process. We want you to be prepared and have a clear understanding of what is going on, especially for those of you out there that this is your first time buying a home. We are going to jump on the Ted Lasso train of positivity. I am going to get you ready for the moment that you have been dreaming of getting your keys to your very own home, all the excitement that you get in being able to do whatever you want in the house. Instead of just watching HGTV and dreaming about, “Someday, I can do that,” you can actually do it to your home. Getting your keys means that you can finally say, “Screw you,” to your creepy landlord who never returns your calls and does not show up anyway. Getting your keys means no more worrying about rising rents.Closing Dates Are Fluid
In this episode, we are fast-forwarding and saying you made it to this happy place of homeownership. I want to help you get to that place so let’s take a quick meditation moment. We are going to close our eyes and imagine that you survived the hell battles of the 2022 bidding wars for first-time home buyers. Let’s discuss what you need to be expecting in those happy final days before you get your keys to your new home. It is exciting. You are about to take on the largest debt of your entire life that you have ever been saddled with. Isn’t that fun? I was supposed to be taking you to a positive, happy place. I missed it. I am glad that I gave you yin and yang, those positive juju vibes I was having with the meditation moment mixed in with a little bit of the reality because that yin and yang, the excitement of the day you are your keys, can also be mixed in with some of the crazy things that happened in the closing. I am excited for you to get your keys. You then are going to take a picture and send it to me so I can put it back here on my wall of success but let me get you ready for everything. The yin and yang are that closing days also end up being some of the most intense and stressful days in the entire process. Usually, that is because the closing does not happen on time. In episode 81, I talked a little bit about this but let me recap it. Closing dates are fluid. Do not put that date on your calendar with a star, rainbows, and unicorns all around it. It is nothing resembling a rock-solid date. It is a goal, not a promise. There are going to be things that happen. Issues are going to happen. Loans are going to need an extra day or two, or an extra week. The seller’s moving truck might be delayed, stuck in Boise in a tornado or the termite tent needs to stay on for a couple of extra days. Those are a few samples of the many things that can happen. You’ve got it. Closing dates are fluid. Don't put that date on your calendar with a star and rainbows and unicorns all around it. Click To Tweet Get your closing date. Plan on moving it on that closing date. If it does not, cool. You can do what my clients did. When they found out that their home did close on the date that it was supposed to, they met me at home, got the keys, and let their four-year-old Jack run around in the backyard and through a big empty house. They ordered pizza and had a picnic on the floor in their new house. They did not have their movers lined up, painters or moving boxes. They just had a couple of days to enjoy the house and move things over slowly. If you are so tight on the purchase that you can’t factor in a week of overlap between your rental place and moving brand new place, if you can’t cover that safety valve, then maybe you are too tight on that purchase anyway.Changes In Your Debt
One thing to keep in mind about the closing is that most people buying a home stretch their loan to the very top of their approval, which means there is not a lot of wiggle room for any new changes in your debt. That is going to throw off your DTI. DTI is your Debt To Income ratio. Suddenly, if you have some new debt and new payments that you are supposed to be making, you might no longer be approved for the home loan while you are under contract trying to purchase a house. That can suck in 50 different ways. Do not apply for our credit card when you are trying to buy a house. Do not get a furniture card or a loan of any kind while you are under contract. It is very important. Do not purchase or agree to purchase anything, not with your existing cash because that might be something that your lender has that they are using to show that you can get your approval. Do not use your credit cards and jack up the amount that you have on your credit card. Do not buy furniture. That is the big one. Many people go out and buy furniture. Do not buy appliances. I do not care. Do not buy a fridge or a washer and dryer. Wait until you close before you do that. Do not do anything beyond grocery and gas unless you are talking to your lender first. These days, that is probably going to cost you $1 million. Do not do anything until you close. Closing does not mean the day you sign your loan documents. The documents have to be processed and then funded. No purchases until someone hands you the keys. The Rule of Thumb is this. The second you sign a contract to buy a home before you spend or receive any money of any kind, that is not a regular monthly expenditure or deposit. Call your lender. I do not even want you adding a new streaming service for a new monthly bill, nothing without calling your lender.Why Do We Say That?: Rule of Thumb
That is going to lead us to another edition of why do we say that Rule of Thumb? It is an approximate method for doing something. It is based on a practical experience rather than theory. The usage of the phrase can be traced back to the seventeenth century. There are two different versions of it. This is the one that is probably more reasonable. It was associated with various trades where quantities were measured by the width or length of your thumb. I never understood how they did that in the old days. I have the world’s fattest thumbs. If you use the width of mine versus the width of my wife’s beautiful long, skinny thumb, mine is twice as fat.
Wire Fraud
Here is a big one to protect you in this new world of the electronic economy. Everything is done electronically now. I am not just talking about Bitcoin, Web 3.0, and the Metaverse. I am talking about wiring money. Something that has been happening for a long time. The bad guys have caught up on this. The biggest scam in real estate is wire fraud. When you get to the closing, you are going to need to give money to buy the house. Most closing companies are not taking a bag of cash. You are going to need to wire them the money. When you get into the closing, you will notice at the bottom of everyone’s email who is involved with the closing has this big disclaimer about wire fraud. This wire is probably going to be one of the biggest sums of money you have ever sent to anybody in your entire life. It is going to be crucial that when someone is asking for a wire, you do that in a timely manner. That means it is going to be coming at you quick, and the scammers know that. They know how excited you are about this and what is going to feel quick. You are going to be rushing. You might just press send. When a wire goes, it is gone. You can’t stop it. It is done. You wire the money and it is theirs. What these scammers are doing is they are getting company letterheads, logos, and email templates. I am talking from everybody, from banks, escrow companies, closing companies, and attorneys. They are even going to put a phone number at the bottom, you call it, and then they are going to answer the phone, act like they are an office, and make it sound official. Avoid the scams by calling or emailing the people that you work with throughout the contracted period. If you are going to be working with escrow title or attorneys, if it is the same person and they verify over the phone with you where you are supposed to wire it, then you are going to be safe.Closing Costs Varies Where You Are
Next up, let’s talk money or closing costs. I talked about this in episode 81. I go into the details there but I could not get to the closing day without make bringing this up. It is the most confusing part of real estate. I told you why they could exactly calculate it because there are 50 states and everyone does it a little bit differently. The calendar day that you end on depends on what your payments are going to be, not to mention, the fact that each state does things differently. There are 700 different ways that a state will close for the conveyance of a property. Conveyance is the first term that I am going to help you understand in the closing. That is a fancy word for, “I gave you all the money in the world. Give me the keys. I promised to pay for 30 years.” No purchases until someone hands you the keys. Click To Tweet A conveyance is a transfer and assignment of any property right or interest from one individual or entity to a conveyor to another, the conveyee. It is usually accomplished through something written. A lot of time, they are going to call that a deed. That is going to transfer the title. If there is any loan on the property, it will also then create a lien on the property. To help us understand why, how all this works and all these fancy new terms, get again, the number one piece of advice I can give you is that you need to have a super rad and the Bichon, the unicorn team to help you with the closing because it is different everywhere else. There is no generic podcast I can do to explain, “At a closing, you are exposed to expect X, Y, and Z.” It is going to be different everywhere. You need a team of local pros that do it because it is not just different in every state. Sometimes, it is different in every county or town. Before I got ready to do this show, I read through these practices in all 50 states. It is mind-boggling how different it is. My State of California can’t even agree on a single way to conduct it. There are multiple different ways, including a vast Civil War line between the North and South. I found out it is different from county to county. Let me give you some samples of what to expect at the closing and all the terms and the definitions that you should be prepping for. First, I will start in Alabama. You will notice some of these terms are going to cross over from state to state but they are different in some places. Here is how they do it in Alabama. There are attorneys involved. In California, we do not have attorneys but the only thing you do in California without a lawyer is buy a house. You have attorneys and title companies that handle the closings. They do not use any escrow companies. Some of you, all you are going to talk about is escrow when you are buying a house. Some of you will never hear that word, and then there are title companies. Most of you will have something involved with a title company. The ownership chain, the people who own the home and then transfer it to the next one, are making sure that everything is what we call a clean title. That means that it is officially owned by the people who officially purchase it. There is not some random claiming that the home is theirs after you just paid for it.

Important Links
- Episode 81 – Past Episode
- How To Buy A Home Podcast – YouTube
- TikTok – How to Buy a Home
This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!
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