The settlement statement can be provided to the homebuyer and seller by the mortgage lender, settlement agent, title company or a real estate attorney.

If you got your mortgage prior to October 2015, you received a HUD-1 settlement statement. Today, most borrowers receive a closing disclosure, a similar document, although it might still informally be referred to as a HUD-1 or settlement statement. The Consumer Financial Protection Bureau required the HUD-1 to be replaced by the more streamlined and less-confusing closing disclosure in 2015, but the HUD-1 is still used in some transactions.

How does a settlement statement work?

Every real estate transaction requires a settlement statement of some kind. It is used in home purchases and refinances, as well as all-cash transactions, reverse mortgages and commercial and investment property sales.

In most cases, the settlement statement will be given to you at least three business days prior to the closing.

Types of settlement statements 

• Closing disclosure: The five-page closing disclosure, which is largely used today in place of the HUD-1 settlement statement, is a finalized version of the loan estimate (previously known as the good faith estimate), the document you receive when you initially apply for a mortgage that provides a snapshot of expected fees. Your mortgage lender is required to give this to you a minimum of three business days before the loan closes. (This three-day rule doesn’t apply to sellers.) “It’s important to note that Saturdays are considered one of the business days when factoring in the three-day window; however, Sunday and federal holidays cannot be included in that timeframe,” says Alvaro Moreira, a mortgage broker and director of Strategic Growth for MortgageRight, based in Atlanta.
• HUD-1 settlement statement: The HUD-1 is a two- to three-page form most often used in all-cash deals, commercial or investment property sales or reverse mortgage situations, explains Tatiyana Toutok, senior title operations supervisor for Wimba Title Agency, based in the New York City metro area. It is similar to the closing disclosure in that it itemizes costs and credits, but the timing of delivery is at least one day prior to closing. The figures on this form can be revised, removed or added at the last minute while both parties are present at closing. “Because the regulations about delivery of the settlement statement are designed to protect borrowers, there isn’t a rule about giving the HUD-1 statement to the seller in advance,” says Elizabeth Whitman, managing member of Whitman Legal Solutions, LLC in Potomac, Maryland. “Still, the seller should ask for a copy, and title companies frequently will provide it to the seller in advance upon request.”

What can I expect to see on my settlement statement?

Several items are listed and organized within a settlement statement, including:

• Loan amount, interest rate and terms
• The property’s contract price
• Allocation of real estate taxes and assessments
• Real estate agent commissions
• Title/escrow company fee
• Lender fees, including for loan origination, underwriting and discount points
• Home inspection fee
• Appraisal fee
• Private mortgage insurance premium (if applicable)
• Homeowners insurance premium
• Title insurance policy premium
• Notary fee
• Other closing costs, such as title insurance fees, deed preparation and recording fees, transfer taxes or conveyance fees
• Homeowners association fees (if applicable)

Next steps

Upon receipt of a closing disclosure or HUD-1 settlement statement, “it’s safe to say that you are at the tail end of the process,” Moreira says. It’s crucial to review this document carefully to ensure all costs are accurate.

“Review all fees reflected on the form with a settlement agent or an attorney representing you in the upcoming transaction,” recommends Toutok.

If you understand and agree to all the fees listed, you’ll move forward with the closing. For a home purchase, you’ll receive instructions from your settlement agent regarding how to deliver money owed, and then attend the closing and provide signatures. In a cash-out refinance, you’ll attend the closing to sign paperwork before you receive the funds.

Learn more:

• Closing costs vs. prepaids: What’s the difference?
• How to avoid ‘junk’ fees when getting a mortgage
• How to get a mortgage