Settlement Statement for Real Estate Closing
A Settlement Statement for Real Estate Closing, often referred to as a HUD-1 Settlement Statement (in the case of federally related mortgage loans), is a detailed document that outlines the financial transactions involved in the sale or purchase of real estate. This statement is typically prepared by the closing agent or attorney handling the transaction and is provided to both the buyer and the seller before the closing meeting.
The Settlement Statement includes a comprehensive list of all costs associated with the real estate transaction, such as:
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Purchase Price: The total amount being paid for the property.
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Closing Costs: Fees incurred during the closing process, including title insurance, attorney fees, appraisal fees, and recording fees.
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Prorations: Adjustments for items such as property taxes and homeowners’ association dues, which may be divided between the buyer and seller based on the closing date.
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Deposits and Credits: Any earnest money deposits made by the buyer and credits that may be due to either party, such as seller concessions.
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Final Calculations: A summary that shows the total amount due from the buyer and the net proceeds to the seller after all expenses and adjustments.
It is important for both parties to review the Settlement Statement carefully prior to closing, as it serves as a final accounting of all funds exchanged and can help prevent misunderstandings or disputes over the financial aspects of the transaction.
Additionally, the Settlement Statement is often used in conjunction with other documents such as the Closing Disclosure, which provides similar information but is structured differently and used primarily for residential transactions following the TRID rules (TILA-RESPA Integrated Disclosure).
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