Closing Statement - Explained
What is a Closing Statement?
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Table of ContentsClosing Statement DefinitionA Little More on What is a Closing StatementLoan Closing StatementProperty Closing StatementAcademic Research
What is a Closing Statement?
A closing statement refers to a document that sums up the details of a transaction, the details include the agreement or arguments of both parties involved in the transaction when closing the transaction. Closing statements can be used in diverse sectors and for several transactions. Depending on the type of transaction in question, closing statements vary. When used for real estate transactions, a closing statement details the agreement between the buyer and seller on the sale and purchase of the home. The costs of the hoe for both the seller and the buyer are contained in the closing statement. It also details the mortgage loan that homebuyers receive to finance the home purchase.
How Does a Closing Statement Work?
Closing statements are also used in lending agreement, this refers to a document containing the activities surrounding how a loan is acquired and the agreements reached by the parties involved. In real estate transactions, a closing agent prepares the closing statement which reflects the cost of the property for both the buyer and the seller. It is important that closing statements reflect the agreement of both buyers and sellers of properties, as well as a mortgage loan that backed up the home purchase. Closing statements are required before a real estate transaction or a lending agreement can be deemed complete.
Loan Closing Statement
The standards of closing statements vary and it is determined by the type of transaction. In most transactions, closing agents are present, these agents make a summation of all terms, agreement and costs involved in the transaction before the transaction is completed. When used in a loan, a closing statement is also called a credit agreement or settlement sheet, this is a document that contains the details of loan application, terms of the loan and agreement reached by the lender and the borrower. Since there are different types of loans such as mortgage loan, revolving credit loan, non-revolving credit loan and others, the closing statements take several forms. Closing statements are needed to complete loan transactions for borrowers. Details of a loan transaction outlined in a closing statement are the principal payment, interest rate, repayment schedule, repayment duration, fees and other terms of the loan. There are certain steps involved in the closing procedures for loans and these are regulated and overseen by the Consumer Financial Protection Bureau in the United States.
Property Closing Statement
In real estate transactions, a real estate closing agent prepares the closing statement and this is required for the transaction to be complete. All the details involved in the sale and purchase of a real estate property are outlined in the closing statement. The details include, administration fees, purchase price, agent commissions, taxes and insurance, transfer process and information about the transfer of ownership.