Settlement Statements, Closing Disclosures, and HUD-1s

There are a number of different ways to finance a real estate purchase. Some buyers are able to pay cash, but many work with financial institutions to obtain the funds to buy the property. Even when working with a lender, there are multiple options available for financing. While those decisions are outside the scope of this discussion, each type of financing does have implications for closing. 

Depending on how the buyer is financing the transaction, there will be particular statements or documents related to the financing that must be signed. In this article, we will walk through a few of the variations and what is involved with each one. 

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Settlement Statements

At a high level, the settlement statement is a document reflecting all the ways that money will change hands between parties at closing. 

More specifically, however, it is an itemized list of all the costs, fees, and payouts based on how the transaction has been financed and what has been required by the closing process. The kinds of costs detailed on the settlement statement will include:

  • The purchase price
  • Realtor’s commissions
  • Property taxes 
  • Recording fees
  • Lender fees, if any
  • Any other fees and costs associated with the transaction

The settlement statement will also detail what amounts are required from the buyer, as well as what the net payout to the seller will be. In many ways, the settlement statement is the receipt for the real estate transaction. 

Settlement statements will typically be prepared by the escrow officer or attorney and are sent out just before closing.  This is an important document that should be carefully reviewed prior to closing. 

Closing Disclosures

A closing disclosure (CD) is a document given specifically to buyers who are working with a lender to finance a transaction. The CD provides all the relevant information regarding the buyer’s loan. It is provided by the lender and typically includes, but is not limited to: 

  • The loan terms, such as:
    • The loan principal 
    • The interest rate
    • Any prepayment penalty
  • Projected monthly payments
  • Lender fees
  • Estimated property taxes
  • Insurance premiums
  • Other costs associated with your loan, such as:
    • Origination fees
    • Appraisal fees
    • Application fees
    • Underwriting fees


The CD will also contain a section of disclosures. These disclosures relate to certain specific terms and conditions of the loan, including:

  • Demand: whether the lender can demand full payment at any time.
  • Late payment: what penalties may be associated with late payments.
  • Partial payments: whether the lender will accept partial payments. 
  • Security interest: the lender’s ability to take ownership of the property if the borrower fails to pay the loan.
  • Complaint: procedures for filing a complaint regarding the loan, lender, or closing.
  • Parties: list of all parties who were monetarily involved in the closing.


The lender will send the CD to the buyer three days before closing. This gives the buyer time to assess the terms of the loan, compare these terms to previous estimates, and a final chance to walk away from the loan prior to final signatures. 


Until 2015, the buyer received a HUD-1 in all transactions alongside a Truth in Lending Disclosure. The HUD-1 was replaced for most transactions in 2015 with the CD. 

HUD-1s are still in use, but in specific situations only. HUD-1s are used in conjunction with reverse mortgages, line of credit loans, residential properties being purchased with commercial loans, and by lenders who do a certain number of loans a year. 

The HUD-1 acts much as the CD, providing all the terms, fees, and costs associated with the loan. 

The information provided in Blueprint Academy does not, and is not intended to, constitute legal advice. All content is for general informational purposes only and is not intended to provide a complete description of the subject matter. Specific processes will vary based on applicable law. The title and closing process will be handled by a third-party attorney to the extent required by law. Product offerings vary by jurisdiction and are not available or solicited in any state where we are not licensed.