What is the purpose of the HUD-1 Settlement Statement?

The HUD-1 Settlement Statement serves a specific and crucial function in real estate transactions, particularly in detailing all costs associated with closing. This document provides a comprehensive breakdown of all fees, charges, and credits related to the purchase of a property. It includes an itemized list of all the financial components involved in the transaction, such as loan amounts, closing costs, real estate commissions, and any other financial considerations.

Understanding the details provided in the HUD-1 is essential for buyers and sellers to ensure transparency and clarity regarding the financial implications of the transaction. This detailed accounting helps all parties involved to confirm that they are being charged accurately for various services and helps prevent any misunderstandings regarding financial obligations.

In contrast, other options, such as outlining the terms of a real estate contract, summarizing property taxes, or assisting in financing arrangements, do not capture the primary function of the HUD-1. The document is specifically designed for closing cost transparency rather than contract terms, tax summaries, or financing details.