Closing statements are a common business document that helps to detail the terms of a business transaction between a supplier and a client. One of the more common types of closing statement is the real estate transaction. Closing agents prepare the statement and normally go over each line item with the client before the transaction is considered complete.
Sometimes referred to as a settlement sheet or a HUD-1, a closing statement will contain all pertinent information associated with the transaction. In the case of real estate deals, the statement will include a number of elements other than just the purchase price. The real estate closing statement will also list any escrow information, including escrow deposits intended to cover taxes, and all types of processing fees that are incurred as part of the business deal.
Other items included in the closing statement will depend on the exact nature of the transaction. In the event that the purchase is being conducted with the creation of a mortgage, the statement will include information about any mortgage insurance and associated fees that will be in effect for the duration of the loan period. Commissions earned by the closing agent will also be listed, along with the points associated with the sale. In the event that hazard insurance is required for the purchase of property in the area, this will also be listed on the closing statement.
The purpose of the closing statement is to provide a single document that captures all the relevant information regarding the business transaction. Rather than having to rely on locating details by sorting through a number of different documents, the closing statement features all the details in an orderly and precise format that can quickly be read and agreed upon by both the buyer and the seller. From this perspective, the closing statement serves as an excellent cover sheet for all the individual documents associated with the sale.
