A closing statement is a document used to provide the closing details on a transaction. Standards for closing statements vary by transaction type. In a real estate transaction, a homebuyer will typically receive a closing statement on both the home purchase and the mortgage loan they receive to finance the purchase.
Breaking Down Closing Statement
Closing statements are part of the final step a borrower must take to close on a loan and receive their principal balance. Closing statements are also prepared by real estate closing agents to complete the real estate sales process. Homebuyers should be prepared to manage and agree to closing statements on both their mortgage loan and home purchase to fully complete a real estate purchase.
Loan Closing Statement
Loan closing agents and standards prepare closing statements to vary by the type of loan being issued. This document may also be called a settlement sheet or credit agreement. In a revolving credit loan such as the approval for a new credit card or banking line of credit, the closing details of the loan are typically reported in the credit application with the borrower agreeing to the lending terms at the time they submit their application for approval. A more complex closing statement is commonly used in personal loans and real estate loans where a borrower is approved for a large lump sum that is associated with non-revolving credit.
Mortgage loans include a closing statement that complete the loan transaction for a borrower utilizing credit to complete the purchase of new real estate property. The mortgage lending industry has numerous regulations governing the mortgage loan closing process, which is overseen by the Consumer Financial Protection Bureau. Standard mortgage loan borrowers must receive a closing disclosure at least three business days before the loan closing. The closing disclosure outlines details of the loan, including the interest rate, monthly payments, length of payments, fees, and any other provisions associated with the loan.
Property Closing Statement
A property closing statement is prepared by a real estate closing agent and includes all of the details required for the purchase of a real estate property. Details and provisions commonly included in real estate transaction deals include the total purchase price, all fees associated with the transaction, commissions, taxes, and any insurance that may be included with the property. The closing statement also details the title transfer process for the property, and when the transfer of ownership will occur.