Short Answer
A settlement statement, now called the Closing Disclosure, is a document that itemizes all the financial details of your real estate transaction. It shows the purchase price, loan amount, closing costs, and the final amount you need to bring to closing. The statement is divided into sections: loan terms, projected payments, closing cost details, and cash to close. Review each section carefully and compare it to your Loan Estimate. Your agent or attorney can help you understand anything that is unclear.
The Closing Disclosure replaced the old HUD-1 Settlement Statement and is the standard document used in most residential transactions. It has five pages. Page 1 shows the loan terms, including loan amount, interest rate, monthly payment, and whether the rate can change. Page 2 shows the projected payments over time and the total cost of the loan. Page 3 breaks down your closing costs into sections A through J, including lender fees, title charges, government recording fees, and prepaid items. Page 4 shows the cash to close calculation, summarizing how much you need to bring. Page 5 lists the loan disclosures and contact information for all parties. Key items to check include the interest rate and APR, the monthly payment amount, the total closing costs compared to your Loan Estimate, the cash to close amount, and any fees that increased. If fees increased by more than 10% from the Loan Estimate, ask your lender why. The disclosure must be provided three business days before closing.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
I review the Closing Disclosure with every single one of my clients before closing day. It is a detailed document, and I want you to understand every line. If something looks different from what we discussed, we have time to correct it before you sign. Do not be shy about asking questions. This is the document that shows exactly what you are agreeing to pay. Let us go through it together.
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