Breaking Down the Real Estate Settlement Statement: A Step-by-Step Guide

by buyorsellyourhome

Understanding Your Settlement Statement

Your settlement statement is the final record of all costs and credits involved in a real estate transaction. It shows how much money buyers need to bring to closing, and how much sellers will receive after everything is settled. This document ensures transparency and helps prevent surprises on closing day.

“A clear settlement statement saves you time, money, and stress by consolidating fees in one place.”

Key Takeaway: Review every line carefully—errors happen. Confirm the numbers match your Loan Estimate and Purchase Contract.

Main Sections Explained

Loan Charges: Origination fees, discount points, underwriting fees.
Property-Related Fees: Appraisal, inspection, survey costs.
Title & Insurance: Title search, title insurance premium.
Prepaid Items: Property taxes, homeowners insurance, prorated interest.
Escrow Reserves: Funds held for future taxes and insurance.

Step-by-Step Closing Process

Compare the settlement statement with your Loan Estimate or Closing Disclosure.
Verify prorations for taxes and fees are correct as of the closing date.
Check seller credits or negotiated repairs are reflected accurately.
Ensure total cash to close matches your records.
Sign the document, making it official.

Tip: Keep a personal checklist during review. Mark each item off to avoid overlooking anything.

Why Accuracy Matters

Even small discrepancies can lead to delays or unexpected charges at the last minute. Your closing agent or attorney is there to help you understand each line, but your vigilance is crucial. Don’t hesitate to ask questions about any fees you don’t recognize.