What is a settlement statement?
The settlement statement is a form that details all the most important aspects of a home mortgage loan. It is a document that is usually no longer than five or six pages and that you must read and understand perfectly before signing a loan contract.
What the settlement statement includes
There are a number of aspects and concepts that any settlement statement for a house should include. Some of the most common and essential are the following:
- The purchase price
- Loan fees (includes issue fee, mortgage points, registration fee, risk assessment fee and services purchased by the borrower)
- The interest rate
- Real estate taxes
- Closing costs (usually between 2% and 5% of the loan amount)
- Other costs to be considered
The delivery of the settlement statement
The lender is required by law to deliver the settlement statement at least three business days before the closing date of the mortgage loan. This way, you have time to check that the terms and conditions of the loan are actually as agreed. If not, you should contact the lender.
Along with the settlement statement, it is important that the lender also delivers the additional closing documents, including the promissory note, mortgage or security instrument.
In short, the settlement statement is one of the most important documents in the process of buying a home. It is a way of finding out what the real cost of the mortgage loan you are going to sign is, as the declaration includes all the essential aspects of the loan.