What Is a Closing Statement?
A closing statement in real estate is known as a HUD 1, and is an accounting in writing prepared at closing of escrow which sets forth the charges and credits of your account. What is shown on the statement is the purchase price, funds deposited or credited to your account, payoffs on encumbrances and/or liens, the costs of all services and a determination of the funds you are entitled to at the close of escrow. When you receive them, review them with your real estate broker. It is extremely logical and reflects the financial aspects of your transaction. If anything does not make sense to you, ask the escrow officer for an explanation.
When going through your closing papers, examine all of them. There may be a refund check hiding in there. Cash the check quickly. Be sure to have the check properly endorsed. All payees must endorse the check. This will eliminate the check being unpaid due to irregular or missing endorsements.
Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes. Your accountant will need the information about the sale or purchase of the property. The IRS and other agencies may require you to prove your costs and/or profit on the sale of any property. The closing statement can assist with that information.