How To Understand The Settlement Statement When Buying A House
Posted on: 13 November 2019
In the process of buying a home, you will receive a settlement statement from your lender or from the title company near the end of the process. This statement is something that you will receive several days before closing on the house you chose to buy, and it is important to fully understand how to read this document, as it is a vital document for closing. Here are some tips to help you understand this statement and how it works when closing on a house.
Understand what it is and the importance of its accuracy
The settlement statement you receive is vital for closing on your house, and it must be 100% accurate for this to happen. Reading through it line by line and verifying its accuracy is your responsibility, and you should do this as soon as you receive the documents. This document is a breakdown of the money being exchanged between you, the buyer, and the seller. It shows exactly where the money is going and who is paying for what, and you should take this form very seriously, as it will dictate what happens at your closing appointment.
It will list the seller's financial information about the deal
One of the columns will show the amount you are paying for the house and will list all the deductions and additions that the seller is responsible for. For example, if the seller agreed to pay some of the closing costs, you should see a deduction on the seller's column for the amount you agreed upon. Additionally, you might see another deduction for property taxes the seller is responsible to pay, in terms of prorated taxes. You will also likely see a deduction for the balance the seller owes on the mortgage for the house. The bottom line on the seller's column will show the amount of money the seller will actually receive in the form of a check on the day of closing.
It will list the buyer's financial information about the deal
The other column will list all the financial transactions for you, the buyer. It will include all the payments you must make for the fees you have, and it will include any other expenses you may have. The bottom line on your column will show you the amount you must bring to the closing in order to make the closing occur.
As the buyer in the deal, you will want to carefully review both the seller's information and the buyer's information to ensure that everything is accurate and according to the purchase offer. If you have questions about the settlement statement or other parts of the home-buying process, ask a real estate agency.
Share