What is a mortgage settlement statement, and what does it include?

@loma 

A mortgage settlement statement, also known as a closing disclosure or HUD-1 statement, is a document provided to the borrower during the mortgage closing process. It outlines all the costs and fees associated with the mortgage loan. Here are the details typically included in a mortgage settlement statement:

1. Loan Information: This section provides the borrower's and the lender's contact information along with the loan details, such as loan amount, interest rate, and term.
2. Property Information: This section contains details about the property being purchased, including the address, legal description, and purchase price.
3. Estimated Closing Costs: It lists all the fees and expenses associated with the home purchase, such as appraisal fees, credit report fees, title insurance, loan origination fees, attorney fees, and government taxes.
4. Loan Terms: This section specifies the terms of the mortgage, including the loan type, interest rate, monthly payments, and any prepayment penalty or balloon payment clause.
5. Cash to Close: It displays the amount of money the borrower needs to bring to the closing table, including the down payment, closing costs, prepaid expenses, and any adjustments.
6. Escrow Account Information: If the borrower chooses to set up an escrow account to pay for property taxes and insurance, this section outlines the initial deposit required.
7. Loan Disclosures: It includes information regarding the borrower's right to cancel/refinance the loan, late payment penalties, adjustable-rate mortgage (ARM) details, and any special loan features.
8. Contact Information: This section provides contact details for the loan officer, mortgage broker, settlement agent, and other relevant parties involved in the closing process.

The mortgage settlement statement ensures transparency and allows borrowers to review and compare the costs associated with their home loan, ensuring they understand the financial obligations before finalizing the mortgage transaction.

@loma 

Additionally, a mortgage settlement statement will also include information about any prorated expenses, such as property taxes or homeowner association fees, that need to be divided between the buyer and seller based on the closing date. It will also include details about any funds being held in escrow, such as insurance or property taxes, that will be paid by the lender on behalf of the borrower.

Overall, the mortgage settlement statement provides a comprehensive breakdown of the financial aspects of the mortgage loan, ensuring that the borrower is fully informed about the costs involved in the home purchase transaction.