With housing competition high, some are turning to collective real estate purchases to become a homeowner faster.
What is a closing statement?
A closing statement, also called a HUD-1 statement or settlement sheet, is a form used in real estate transactions with an itemized list of all the costs to the buyer and seller.
A closing agent prepares the closing statement, which is settlement sheet. It’s a comprehensive list of every expense that the buyer and seller must pay to complete the real estate transaction. Fees listed on this sheet include commissions, mortgage insurance, and property tax deposits. It includes costs such as loan origination fees, appraisal fees, inspection costs and mortgage broker fees. It might also itemize fees to pull the borrower’s credit report, escrow funds, title search fees and fees for services provided by lawyers, notaries and closing agents.
For transactions that do use a closing statement, the buyer and seller usually sit down with a professional such as a lawyer, real estate agent, or closing agent to review the statement and ensure everything is correct. Even after the statement is prepared, it might include last-minute changes that both parties need to review for accuracy. The statement lists the fees in two columns, one on the left side of the sheet for the buyer’s expenses and one on the right for the seller’s expenses. The amount of cash the buyer must give the seller has its own entry at the bottom of the document.
Closing statement example
If a real estate transaction involves a closing statement, both the buyer and the seller should receive it at least one day before the completion of the transaction. In some cases, however, it’s not available until a few hours before the closing. Both parties will have a detailed and itemized record of everything they’re required to pay to complete the transaction; they should know where all of the money is going and how much they’re spending.
Thinking of buying a home? Learn what you need to do before you start house hunting.