What is the primary function of a closing statement?

The primary function of a closing statement is to itemize all costs and disbursements involved in the closing of a transaction. This detailed document provides a comprehensive breakdown of the financial aspects associated with the sale of the property, including but not limited to the sale price, costs of sale, taxes, title fees, and any credits or debits between the buyer and seller.

This transparency is crucial for both parties as it ensures that all parties are aware of the financial commitments and obligations they are taking on and allows for accurate accounting of the funds being exchanged. Moreover, the closing statement serves as an important reference in case there are any disputes or questions about the transaction in the future, helping to clarify what each party agreed to during the closing process.

Other options, while relevant to real estate transactions, do not capture the comprehensive financial summary that the closing statement provides. For example, documenting property title changes is an important legal function that may be part of the closing process but is not the primary aim of a closing statement. Similarly, recording the buyer’s offer and establishing a mortgage payment schedule are aspects of the sale process, but they fall outside the role of the closing statement itself.