How to Read a Settlement Statement When Selling a Home

A Guide to Understanding Closing Statements and Disclosures

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📝 Editor’s Note

A settlement statements is an essential document in a real estate deal. It’s important to be familiar with the closing statement, also known as an ALTA or HUD-1, and other keywords associated with closings. You can request your real estate agent to review sample documents with you, so you will know what to expect during the closing process.

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Understanding the closing process and the settlement statement is an integral part of selling your home. After accounting for fees, taxes, and other charges, the settlement document outlines the calculations that detail how much revenue you will receive from the sale.

What is a settlement statement in real estate?

A settlement statement includes fees and credits in an itemized list outlining the finances of an entire real estate transaction. The statement is a record that shows how all money changes hands. In addition, the document provides details on the funds due to real estate agents via commissions, taxes, and other fees. The bottom of the statement outlines the net proceeds from the sale for the seller and the funds due from the buyer.

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Does the seller get a closing statement?

The closing statement is equally important to the buyer and the seller. Therefore, the seller and buyer both receive a copy of the closing statement and need to sign it at closing in order for the transaction to close.

Who prepares the settlement statement?

The statement is created by the party coordinating the closing. This can be an escrow firm, real estate attorney, or a title insurance company.

What is the settlement statement called now?

A settlement statement is still called a settlement statement. However, there are several versions of the documents used in different states. For most transactions, the form created by the American Land Title Association (ALTA) is used across the country, and is referred to as the ALTA. This is mainly used for non-loan transactions.

Before 2015, the settlement statement in loan transactions consisted of a HUD-1 and a Truth-in-Lending Statement. In October 2015, those two documents were combined into one and are now called the Closing Disclosure (CD).

Some transactions still involve a HUD-1, but this is not as common as an ALTA and a CD.

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Are the settlement statement and closing statement the same thing?

Yes, they are the same. However, most in the industry use the term “settlement statement.”

What is the difference between the Closing Disclosure and settlement statement?

A Closing Disclosure is very similar to a settlement statement. However, it is specific to the borrower and their fees. It is issued by the buyer’s lender and compared to the loan estimate. The disclosure is created based on the estimated settlement statement sent by the closing real estate agent. Therefore, the Closing Disclosure and settlement statement should match. Sellers will not receive the Closing Disclosure.

When buyers have a loan, the CD may show that the lender requires the following line items as part of the loan costs:

  • The homeowner’s insurance line outlines the frequency at which homeowners insurance is due and how much is owed.
  • The mortgage insurance line outlines the frequency at which mortgage insurance is due and how much is owed.
  • The city/town taxes line outlines the frequency at which city/town taxes are due and how much is owed.
  • The county taxes line outlines the frequency at which county taxes are due and how much is owed.

There can also be an aggregate adjustment. This is a calculation used to keep the lender for the buyer from getting more money from the buyer than they are allowed to. For example, they cannot hold more than one-sixth of a new homeowner’s property tax and insurance payments. The law that mandates this is the Real Estate Settlement and Procedures Act (RESPA).

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How do I read a seller’s closing statement?

A column on the settlement statement lists the seller’s debits and credits, and a separate column lists the buyer’s debits and credits. There is also a description of the charges.

How do I read the top of the settlement statement?

The upper portion of the settlement statement has several boxes for required information, including primary data about the sale, the names of the parties, the property address, and the date of closing.

Here is the data that goes into those boxes:

  • File No./Escrow No.- The escrow number is similar to a bank account with digits that correlate to a single deal between a buyer and seller.
  • Date & Time- Date and time of the closing, such as June 15, 2018, at 10 a.m.
  • Officer/Escrow Officer- The name of the officer facilitating the closing.
  • Settlement Location- The physical location where the closing is happening, such as an escrow firm or title company office
  • Property Address- The address of the property being sold
  • Buyer- First and last name of the buyer(s)
  • Seller- First and last name of the seller(s)
  • Lender- The name of the company financing the loan for the buyers
  • Settlement date- Aka closing date
  • Disbursement Date- The date when everyone will get paid. The date is usually the buyer’s payday when you will be able to collect the profit for your house sale as a seller.
  • Additional dates per state requirements- such as the tax payoff date or recording date (which sets the timer for property ownership).

What is an estimated settlement statement?

The estimated settlement statement documents costs and credits associated with buying a home. It shows a buyer their estimated total costs for buying a home and shows the seller how much money they will take from the transaction. It is the detailed receipt of the transaction.

When do all parties get paid?

The disbursement date is when all parties to the transaction get paid. This is most likely payday for the buyer or the settlement date. Most settlement dates fall on a Monday through Thursday and during banking hours to facilitate the speed of the payment. Sometimes, waiting until Friday to close can cause you to wait until Monday to get paid.

What is an excess deposit on a closing statement?

The excess deposit is the amount of money sent to the seller by the buyer before closing. After accounting for real estate agent commission fees, the deposit line represents any funds remaining from the buyer’s earnest money deposit.

For example, if the buyer paid $7,000 in earnest money as a deposit on the house priced at $100,000, the buyer agent and seller agent would receive 6% of the $100,000 total, so $6,000. This would leave a $1,000 in the excess deposit paid to the seller.

What is a preliminary closing disclosure?

A Closing Disclosure provides a preliminary accounting of the final loan interest rate, closing costs, finance charges, monthly mortgage payments, and other charges. The disclosure is used in conjunction with the initial Loan Estimate to show the final charges compared to the initial costs.

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What is a settlement statement?

A settlement statement outlines the fees and credits of a real estate sale. It is itemized, and the record or receipt shows how money has changed hands throughout the transaction.

What happens at settlement for the seller?

At settlement or closing, the parties sign the documents that give ownership of the house to the new owner. It makes the buyer the legal owner of the home and occurs about four to six weeks after the purchase and sale agreement for the house is signed. The funds are transferred to the seller and all payoffs are made.

What is an aggregate adjustment?

The aggregate adjustment is the calculation by a mortgage lender that prevents them from collecting more money from a borrower’s escrow account than is allowed under the Real Estate Settlement Procedures Act (RESPA).

Are HUD-1 Settlement Statements still used?

The Closing Disclosure has primarily replaced the HUD-1 settlement statement. However, it is still used in some transactions such as cash deals and reverse mortgages.

When should I receive the closing disclosure?

By law, buyers must receive your Closing Disclosure at least three business days before closing. It tells you how much the buyer will pay for their loan.

Is the closing statement the same as the closing disclosure?

Yes, they are the same. The closing statement or closing disclosure shares the details of a loan before closing. You can get a closing statement for a variety of loan types, but a mortgage closing statement is the most recognizable and commonly discussed.

Where do you find points on a closing statement?

The lender for the buyer will send them a Form 1098. Box 2 shows the points paid on the buyer’s loan. If the bank does not send the form, the issues can be found on the settlement disclosure received at closing. Depending on who paid the points, the points will show up on that form in the sections detailing buyer and seller costs.

How do I fill out a HUD-1 Settlement Statement?

A mortgage, title, escrow, or settlement company will provide the settlement statement completed already. They require the real estate agents to submit many forms for buyers and sellers. Then, after a home closes, a HUD-1 Settlement Statement is issued to the buyer and seller—the document shows which parties are to pay for the transaction.

Sell your home faster, with no upfront cost using our For Sale By Owner solution.

It’s easy, fast and simple. List your home for free with Richr with Richr’s happiness guarantee.

With Richr:

  • You’ll get a full-service concierge agent
  • You get a Free MLS listing
  • Your Title Settlement fees are included, worth $750
  • You get HD Photos included, worth $250
  • You get a home warranty included, worth $6000
  • You get 1% cash back when you buy your next home.

Call us now on 1-844-957-4247 or Start Listing Your Home Now!


The settlement statement is the critical document for any real estate transaction involving a loan. Real estate agents are well-versed in reading, understanding, and looking for any issues associated with the statement and associated documents. Ensure you know what you are looking at and ask your agent questions. Or, take advantage of the knowledge of title agents and reach out to them for assistance. Richr Title LLC has a team of people waiting to assist.

If you want the best solution to selling your home, market your home with Richr, and get full service with title settlement services included for 1% paid only at closing. Richr’s promise of a dedicated happiness team gives sellers the peace of mind that someone is available for them through to closing.

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