Escrow Thursday: What Is a Closing Statement?

What Is a Closing Statement?

A closing statement is in writing and is an accounting prepared at the close of escrow which states the charges and credits for both the buyer(s) and seller(s) of a property. It contains all the pertinent information such as: the purchase price, funds deposited, seller concessions to closing costs, the amount of your loan, any and all prorated payments to taxes, etc. It will also shows all of the costs associated with the closing of your transaction.

The statement should be understandable to you as you go over all the credits and charges. If there is something that does not make sense, or seems out of place, ask your escrow officer what it is. They will be able to explain it to you so that you can understand all of the items on the statement.

Examine all papers that you will be requested to sign. They are legal documents and you should review them before signing them. You cannot say later that you did not read the documents and therefore they are not binding. Like any legal documents, you should read and understand them before you sign.

Your closing and other escrow papers should be kept almost forever for income tax purposes. Your accountant will need the information about the sale or purchase of the property, and the IRS may require you to prove the costs and/or profit on the sale of any property. Your closing statement will assist in this task.

Do not expect your escrow company to provide you with the statement years down the road. They need only retain them for five years. There could also be a cost for providing you with past records that need to be found and then pulled from storage.

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