What is a settlement statement?

In real estate, a settlement statement is a document which sums up all the fees and payments done in a real estate transaction. This is a standard form created by the U.S. Department of Housing and Urban Development. This is also known as the HUD-1.

In a settlement statement, you will find the summary of your complete transaction especially the monthly amortization (as the buyer), the payment that will be credited to the seller, the out-of-closing fees and payments, loan and broker fees, and other relevant details that should be included therein.

HUD-1 settlement statement now known as Closing Disclosure

Since October 2015, the HUD-1 form was replaced by what is now known as the Closing Disclosure. This is in response to the new TILA RESPA Integrated Disclosure (TRID). Similar to the HUD-1 settlement statement, the closing disclosure also includes all and the final details in a real estate transaction where a lender is involved. This is a 5-page long document.

Most likely, the lenders are the ones responsible for handing over the closing disclosure to the home-buyer borrower. However, settlement agents are also hired to do the task as well.

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HUD-1 settlement statement still in use

Even with the new settlement statement duly identified as Closing Disclosure, the old unrevised HUD-1 is still in use. But, this is commonly used for reverse mortgages only as this type of loan is popular with senior sellers, aging 62 and above.

 

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