Understanding the distinction between the closing disclosure vs. settlement statement is crucial for homebuyers, sellers, and real estate professionals to navigate transactions with confidence in Massachusetts. Here is what you should know about closing disclosure vs. settlement statement, including their purpose and origin.  

Closing Disclosure

  This document, provided by the lender, details the final terms and costs of the loan. It is designed to give borrowers a clear view of their loan terms, monthly payments, and the total loan cost. Lenders are mandated to furnish this document to borrowers at least three days before closing on mortgage loans. The three-day provision allows borrowers ample time to digest their loan information before sealing the deal.   This document emerged from the TILA-RESPA Integrated Disclosure (TRID) rules, which began in October 2015. The goal was to amalgamate two earlier documents—the Truth in Lending (TIL) statement and the HUD-1 settlement statement—into a single, comprehensive form.  

Settlement Statement

  Previously known as the HUD-1, the settlement statement offers a thorough breakdown of all costs linked to the real estate transaction for both the buyer and seller. It itemizes expenses like real estate commissions, loan fees, property taxes, and other settlement charges. In many transactions, this statement plays a pivotal role during the closing to ensure all parties are correctly compensated. By presenting a full account of the costs for both the buyer and seller, the settlement statement ensures a transparent transaction.   This form can be traced back to the Real Estate Settlement Procedures Act (RESPA), which sought to offer consumers enhanced settlement cost disclosures and eradicate unfavorable practices.  

Closing Disclosure vs. Settlement Statement: Which Document Do You Need in Massachusetts?

  A prevalent misconception is that one document might make the other redundant. However, the closing disclosure vs. settlement statement both have distinct roles and significance. While the closing disclosure is pivotal for borrowers to decipher their loan details, the settlement statement is indispensable for a clear and accurate transaction in Massachusetts.   For those in the Massachusetts real estate market, understanding the differences of closing disclosure vs. settlement statement is paramount for transparent, successful transactions. Whether you’re buying, selling, or facilitating transactions, acquainting yourself with these documents and consulting professionals when in doubt can make all the difference.   Damore Law provides expert legal guidance with a specialty in real estate, business, family matters, and estate planning. Our seasoned team of attorneys is dedicated to providing tailored solutions to your unique legal needs, ensuring peace of mind and favorable outcomes. Contact us to secure your future with the right legal partner by your side.