What is the purpose of a closing statement in a real estate transaction?

A closing statement serves a critical role in a real estate transaction by providing a detailed account of all financial aspects that occur just before the closing takes place. This document outlines the monetary exchanges between the buyer and seller, including the purchase price, any deposits, adjustments for taxes, and costs related to the transaction such as closing costs and commissions.

The purpose is to ensure transparency and accuracy, enabling both parties to see exactly what they owe and will receive at the closing, which facilitates a smooth transfer of ownership.

This documentation is crucial for the final review process, helping both parties to confirm that all agreed-upon terms are represented accurately. It prevents misunderstandings regarding financial obligations and protects the interests of everyone involved in the transaction.