Do You Know: What Is a Closing Statement?

Nov 10, 2022 By Susan Kelly


A closing statement is a record of the final terms of a business deal. The buyer of a home getting financing for the purchase will get closing information from the lending institution, while the seller will get one from the real estate agent who closed the deal. Closing statements are provided alongside all loans, though their complexity can range widely. Within three days of applying for a mortgage, borrowers can expect to receive a loan estimate that can be used to estimate the monthly mortgage payment. The buyer will receive the final Closing Statement before the closing. If you're the seller, you'll get a Closing Disclosure that reflects your data and outlines your responsibilities and rights in the transaction from the seller's perspective.

How Does a Closing Statement Work?

Lending agreements also use closing statements, which detail the steps taken to acquire a loan and the terms upon which it was agreed. Each party to a real estate transaction receives a closing statement that itemises their respective costs relating to the sale or purchase of the property. Closing statements must accurately reflect the terms of the mortgage loan that funded the home purchase, as well as the agreement between the buyer and seller. All parties to a real estate sale or loan closing must sign a closing statement.

Definition and Examples of Closing Statements

Both the seller and the buyer should thoroughly review the closing statement (also known as a settlement statement or closing disclosure) to ensure that they fully understand the terms of the agreement, including the total amount and duration of any payments. The closing statement will arrive in plenty of time for you to review it thoroughly before the loan closes, and it follows a standard format regardless of the type of loan you're getting. The most common situation in which a closing statement is used is in the context of a mortgage loan. If you've applied for a mortgage loan and been approved, you'll get a summary document with the agreement's critical details about a week before closing.

You can get the most up-to-date picture of your mortgage loan's terms, interest rate, and any fees or penalties at this site. Before finalising, you'll look it over, ask any remaining questions, and hopefully get them answered. The house seller will receive an identical disclosure at roughly the same time. It will detail the total amount they can expect to receive at closing, less any applicable fees and commissions. Thanks to the openness of both parties, there will be no unpleasant surprises on the day of the finish, ensuring the smooth completion of a substantial financial transaction.

Components of a Closing Statement

The closing statement details any fees associated with the home purchase or sale. The property itself can be described on the form if desired. Whether you are the buyer or the seller can affect what information is included on your closing statement. In general, these are the components of closing statement:

Property Details

The property's address, construction year, and type should all be included in the settlement statement. The closing statement should also include the home's sales price, the amount of the buyer's down payment, and any credits being given to the seller.

Prorated Amounts

The closing statement will also detail any prorated payments made by the buyer or seller for items like property taxes or homeowners association (HOA) fees.

Loan Costs

Loan-specific information, such as points, underwriting, application, and origination fees, would be included in this part of the closing statement. Prepaid interest and mortgage insurance premiums would also fall under this category.

Miscellaneous Loan Costs

Additional fees associated with the loan will be detailed below. This includes costs for things like research, credit reports, and appraisals. The closing statement would also have the fees for any surveys, inspections, or pest inspections.

Escrow And Recording Fees

The closing statement outlines all of the costs associated with the escrow account and any government recording fees.


Real estate commissions paid to the buyer's and seller's agents would also be detailed on the closing statement. In most cases, the seller will cover these expenses from the money they gain from the sale.


The closing statement is the first step toward completing a real estate deal. There shouldn't be any unpleasant surprises in this rundown of all the costs and fees you'll incur; knowing exactly how much you'll need to pay at closing can provide some welcome relief. Still, many are shocked by the final tally of fees at the close. This is why it's crucial to review your statement thoroughly and keep some emergency funds on hand. The next step is to conclude the transaction smoothly.

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