You're about to cross the
finish line in your home selling process. There are
just a few more steps that you need to complete
before you hand over the keys to the home. During
the home closing, the primary document you and your
buyer will be dealing with is the settlement
statement (also called the closing statement). This
is a document that lists out the fees and charges
that you, as the seller, and the buyer are required
to pay in the housing transaction.
The settlement statement is prepared either by the
buyers lender or the escrow agent. Regardless of who
prepares the statement, that person is required to
follow pertinent federal guidelines. The Real Estate
Settlement Procedures Act of 1974, the governing law
for closing processing in housing transactions.
It is important that you pay close attention to the
settlement statement as the for sale by owner seller
because it will list out the costs for which you and
the buyer are responsible. Most likely, you and the
buyer have already negotiated which of you will be
paying which closing costs. You must review the
settlement statement to ensure these costs have been
assigned to the correct party.
Usually, the settlement statement is broken down
into two pages. The first page summarizes payments
to be made in the housing transaction. Included is
the sales price of the home, settlement charges that
the borrower must pay, tax adjustments, settlement
charges the seller (you) must pay, first mortgage
payoff amount, and total amount of cash the borrower
(the buyer) must pay to the seller.
The second page of the settlement statement lists
the settlement charges that you and the buyer are
required to pay. This page is where your previous
closing cost negotiations will appear. Your sales
contract should also list these charges and to whom
the charges were assigned. There will be a group of
charges that are related to processing the mortgage,
whether it is a new mortgage or an assumed one.
Typical fees are the loan origination fee, appraisal
fee, lenders inspection fee, assumption fee, and
underwriting fees.
The mortgage lender often requires some interest and
insurance premiums to be paid in advance. Usually
paid by the buyer, these fees are also listed on the
second page of the settlement statement. Other
mortgage related costs include reserves that are
deposited to set up an escrow account. These charges
are assigned to the buyer.
Another group of fees included in the settlement
statement are related to guaranteeing the legitimacy
of the title: title search, title insurance,
document preparation, notary fees, and attorney
fees. Refer to the sales contract for the agreements
made pertaining to these fees.
Government fees include recording fees, tax and
stamps and are usually negotiated in the sales
contract.
The final group of charges is miscellaneous charges
that were not included in previous sections of the
settlement statement. For example, a pest inspection
requested by the buyer is a miscellaneous charge.
The settlement charges are totaled and entered on
the first page in the summary information on the
first page of the settlement statement.
Download a copy of the US Department
of Housing and Urban Development's (HUD) booklet
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