What Is a Settlement Statement?

A settlement statement, or Form HUD-1, is a document that indicates fees and charges that both the buyer and seller incur during the settlement process of a housing transaction. The U.S. Department of Housing and Urban Development administers Form HUD-1 and other documents necessary to close a real estate transaction.

Loan Information

A settlement statement, which must be provided to the borrower by the seller or seller's agent, indicates the type of loan, file number, loan number and mortgage insurance case number. Form HUD-1 also includes the names and addresses of the borrower, seller and lender; the property location; the settlement agent; and the place and date of settlement.

Summary of Borrower's Transaction

The summary of borrower's transaction indicates items such as the gross amount due from the borrower, contract sales price and settlement charges the borrower must pay. This section also includes real estate taxes the borrower owes the city and county of residence.

Summary of Seller's Transaction

The summary of seller's transaction shows the amounts the seller incurs during the closing process. This covers items such as the gross amount due from the seller, contract sales price and city/county taxes the seller owes on the property.

Gross Amount Due From Borrower

In a housing transaction, the gross amount due from the borrower equals the amount paid by or on behalf of the borrower. It includes the debtor's deposit money, or down payment, and the principal amount of new loans.

Gross Amount Due To Seller

The gross amount due to the seller represents the seller's take-home amount. It equals the property sale amount minus existing loans on the property minus settlement charges to the seller.

Items Payable In Connection With Loan

Federal authorities require that borrowers pay specific fees in connection with a mortgage or other housing-related loan. These fees include loan origination fees, appraisal fees, loan discounts (also called points), credit report expenses, mortgage insurance application fees and lender's inspection expenses.

Items Required By Lender To Be Paid In Advance

A lender may require that a borrower pay some items in advance, depending on the mortgage covenant. These items include interest for a specific period of time (three months, for example), mortgage insurance premiums and hazard insurance premiums.

Reserves Deposited With Lender

Lenders require that borrowers deposit specific amounts, or reserves, before advancing funds in a housing transaction. Reserves include hazard insurance, mortgage insurance, city property taxes, annual assessments and county property taxes.

Title Charges

Title charges and associated expenses include settlement or closing fees, abstract or title search expenses, title examination charges and title insurance expenses. Other charges related to property titles include documentation preparation fees, notary expenses and attorneys' fees.

Government Recording and Transfer Charges

These charges relate to the process of recording real estate transaction data in state and local government archives. Recording and transfer expenses include city and/or county stamps, state taxes and recording fees for deeds.