Navigating Your Closing Costs: A Clear Guide to the ALTA Settlement Statement

by buyorsellyourhome

Understanding Your Settlement Statement

When you reach the closing table on a home purchase or sale, you’ll encounter the ALTA settlement statement, a detailed breakdown of all costs, fees and funds exchanged. Developed by the American Land Title Association, this document replaces older forms and provides a clear, standardized format for buyer and seller charges.

Why It Matters

Key Takeaways:

Transparency: Everyone gets a line-by-line listing of costs.
Compliance: Meets federal and state disclosure requirements.
Accuracy: Helps prevent last-minute surprises.

Core Sections of the Statement

Loan Information: Origination fees, points, lender charges.
Title Charges: Insurance premiums, search and exam fees.
Prepaid Items: Property taxes, homeowner’s insurance, PMI.
Adjustments: Prorations for utilities, HOA dues, tax assessments.

“Buyers typically see around 2–5% of the purchase price in closing costs, so reviewing each line carefully can save hundreds or thousands.”

Step-by-Step Review

Compare lender numbers with your loan estimate.
Verify title insurance and escrow fees.
Check prorations: seller credits vs. buyer debits.
Confirm any broker commissions or real estate agent fees.
Ask questions if figures don’t match your expectations.

Tips for a Smooth Closing

Review early: Request the statement at least three days before closing.
Bring documentation: Purchase contract, loan estimate, and prior disclosures.
Consult your agent or attorney if any line item is unclear.

Common Pitfalls to Avoid

Missing credits: Ensure prepayments by the seller are correctly applied.
Duplicate fees: Watch for redundant or misclassified charges.
Escrow holdbacks: Confirm any retained funds for repairs are documented.

Pro Tip: Always compare the final ALTA form against your initial estimates to catch discrepancies before signing.

Final Thoughts

Mastering the settlement statement empowers you to make informed decisions, avoid hidden costs, and close with confidence. By following these guidelines and staying organized, you’ll transform a complex pile of numbers into a transparent blueprint of your real estate transaction.

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