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AaronAmat/Getty Images August 18, 2022 Troy Segal is Bankrate's Senior Homeownership Editor, focusing on everything from upkeep and maintenance to building equity and enhancing value. Bankrate logo

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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo

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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo

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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. A closing statement is a form used in a real estate transaction that includes an itemized list of all the buying or selling costs associated with that transaction. It’s a standard element of , especially those that involve mortgages, and refinancings. As the name implies, this summary of expenses is given to buyers and sellers shortly before the close of their transaction. “These forms exist to prevent any financial surprises at the closing table,” says Boris Fabricant, Licensed Associate Real Estate Broker at Compass Real Estate. “They typically contain the loan terms, projected monthly payments, and all the closing costs required.”

What is a closing statement

The closing statement, also called a closing disclosure or , is essentially a comprehensive list of every expense that either the buyer and seller must pay to complete the (or whatever the property is). Costs listed on this sheet include mortgage insurance, property tax deposits, loan origination fees, appraisal fees, inspection costs and real estate agent commissions. The sheet might also itemize fees to pull the borrower’s credit report, title search fees and fees for services provided by lawyers, notaries and closing agents. Any escrow funds required on the date of closing will also be listed, as well as any deposits — such as – the borrower has already made. The closing statement typically lists fees in two columns, one detailing the buyer’s expenses and one detailing the seller’s expenses. The amount of cash the buyer must give the seller has its own entry at the bottom of the document. In addition to these combined settlement statements, there can be separate ones as well, usually for sellers. Lightbulb Bankrate Insight Closing statements are provided in most types of mortgage transactions, except for certain manufactured-home loans (manufactured homes are often considered personal property, not real property). They are not issued for home equity lines of credit (HELOCs) either.

Closing statement vs HUD-1 settlement statement

Closing statements are often confused with . They’re distinct documents, though they serve similar purposes: to be a balance sheet of closing costs. If you purchased a home on or before October 3, 2015, you probably received a HUD-1 settlement statement detailing buyer and seller costs. If you closed after that date, though, you probably receive a closing statement instead of a HUD-1 form. And that’s what home buyers and sellers generally receive today. While the HUD-1 and closing statements contain much of the same information, including the property price, mortgage interest rate, fees and credits, the closing statement was designed to be less overwhelming and easier to understand. It has replaced the HUD-1 for most residential real estate transactions. However, HUD-1s are still used for reverse mortgages and

What does the closing statement contain

Closing statements break down all the expenses the buyer and seller are responsible for and have incurred throughout the transaction, from the big-ticket items (the ) down to the smallest charges (a notary’s fee). Commonly included: Expense What it means Loan amount The sum total of the mortgage or home loan Interest rate The interest rate charged by the lender Monthly payment Detailed monthly payment amounts, including how much you’ll pay toward principal and interest Loan origination fees If the mortgage carries an origination fee Property tax deposits Any payments made toward local property taxes Appraisal fees The amount charged by the appraiser for their evaluation of the property Credit report fees The cost of running the buyer’s credit report Inspection costs The charges for a home, pest or other sort of inspection to assess the property’s condition Escrow funds Any escrow moneys required to be deposited at closing Title fees Fees associated with title searches and title insurance Commissions The compensation sums (typically a percentage of the purchase price) earned by the buyer’s or seller’s Realtor or real estate agent Broker fees Compensation for a mortgage broker, if the buyer used one Attorney fees Payment for the real estate attorneys who prepared loan documents, purchase agreements and other work associated with the transaction If the seller is paying off their own mortgage with the proceeds, any costs and other details of that loan will be included too.

Preparing and receiving the closing statement

Closing statements are prepared by closing agents, who help facilitate the sale of a property to a buyer. Typically, closing agents are real estate attorneys, or escrow officers. Unlike the HUD-1, which closing agents generally provided to buyers and sellers on the day of a real estate closing, closing statements must be issued at least three business days before closing. This deadline allows all parties to review the form and ensure the information it contains is accurate. Not just the sums involved and agreed-upon, but also who pays what. Whether you’re buying or selling the home, it’s essential to review your closing statement once you receive it, to make sure it accurately reflects the terms of the — especially the contract’s delineation or assignment of any particular costs. Those financing the home purchase should make sure all the mortgage-related fees, terms and other details dovetail with the statements and documents from the lender. If you see a mistake on your closing statement or have questions about an itemized cost, reach out to the closing agent immediately.

Final word on closing statements

The closing statement marks the beginning of the end of a real estate transaction. This summary of all the charges and fees involved should contain no surprises; in fact, knowing how much you’ll be can offer peace of mind. Even so, people are often shocked when they see how the mount up. That’s why it’s important to examine the statement carefully, and to have a cushion of ready money available to meet any unexpected expenses. Then, it’s on to successfully sealing the deal. SHARE: Troy Segal is Bankrate's Senior Homeownership Editor, focusing on everything from upkeep and maintenance to building equity and enhancing value.

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