Why is the RESPA closing statement reviewed before closing?

The RESPA closing statement, also known as the HUD-1 Settlement Statement, is reviewed before closing primarily to check for mathematical errors. This document provides a detailed breakdown of all the costs associated with the transaction, including loan fees, escrow amounts, and other closing costs. It is critical that these figures are accurate to ensure that both buyers and sellers understand the financial requirements and obligations of the transaction.

Math errors can lead to incorrect amounts owed or received, which could create disputes or financial difficulties post-closing. Therefore, a thorough review of the closing statement is a vital step in the closing process, ensuring that all calculations are correct and reflect the agreed-upon terms of the sale. This review is an essential protective measure for all parties involved in the transaction, minimizing the risk of errors that could affect financial outcomes.

Other options, while related to the closing process, do not specifically address the main reason for reviewing the RESPA closing statement. Signing off on the final terms of the loan, confirming the buyer’s loan eligibility, or verifying property ownership are important steps in the real estate transaction process, but they are conducted through different documentation and verification processes, rather than solely through the RESPA closing statement.