Buying a home in the U.S.—whether it’s your first or fifth—can feel overwhelming, especially when you’re asked to sign a stack of documents you’ve never seen before. Among these, three documents play a major role right before you get the keys to your new home: the HUD-1 Settlement Statement, the Closing Disclosure (CD), and the Clear to Close (CTC) notice.
In this guide, we’ll break down each document in simple terms and show you how to avoid common mistakes that could delay—or even derail—your home purchase.
1. What Is the HUD-1 Settlement Statement?
The HUD-1 is a detailed summary of all fees and charges related to a real estate transaction. It lists exactly who pays what—covering everything from agent commissions and title fees to taxes and legal costs.
✅ When Is It Used?
HUD-1 forms are no longer used for most mortgage loans. Since 2015, they’ve been replaced by the Closing Disclosure (CD) for residential mortgage deals.
However, HUD-1 is still used for cash deals, reverse mortgages, or other special cases.
✅ What’s Included?
- Title and escrow fees
- Commissions
- Transfer taxes
- Legal fees
- Payoffs and prorated taxes
📎 Resource: What’s on the HUD-1 Form – Consumer Financial Protection Bureau
2. What Is a Closing Disclosure (CD)?
If you’re financing your home through a mortgage, the Closing Disclosure (CD) is the most important document you’ll receive before closing. It’s a 5-page summary that tells you:
- Your final loan amount
- The interest rate and monthly payments
- How much you need to bring to closing
- A breakdown of closing costs, including lender fees, escrow, taxes, and insurance
📌 By law, your lender must send you the CD at least 3 business days before closing, giving you time to compare it to your original Loan Estimate (LE).
🔍 What You Should Check:
- Are the interest rate and loan terms the same as quoted earlier?
- Are there any unexpected fees or increases?
- Is the cash-to-close amount accurate?
If something looks off, don’t ignore it. Contact your loan officer or agent immediately.
📎 Learn more: Understanding the CD – Bankrate
3. What Is Clear to Close (CTC)?
After all documents are reviewed and approved, your lender will issue a Clear to Close notice. This is the official green light that your financing is finalized and you’re ready to move forward.
Why CTC Matters:
- Title companies won’t schedule a closing without CTC.
- It confirms you’ve passed underwriting and met all loan conditions.
- Once issued, the closing date is locked in and your final paperwork is prepared.
📌 Important Tip:
Avoid making big financial moves (like applying for a new credit card or changing jobs) between CTC and your actual closing date. Doing so can put your approval at risk—even at the last minute.
📎 More on Clear to Close – Rocket Mortgage
Other Key Documents You’ll See at Closing
Besides HUD-1, CD, and CTC, you’ll encounter a few more important documents during closing:
| Document | What It Means |
|---|---|
| Loan Estimate (LE) | Initial quote of loan terms, compared to CD to check for changes |
| Title Commitment | A report outlining conditions before issuing title insurance |
| Deed | Legal transfer of ownership from seller to buyer |
| Promissory Note | Your legal promise to repay the loan |
| Mortgage / Deed of Trust | Grants the lender rights to the property if you default |
Pro Tips for a Smooth Closing (Especially for International Buyers)
If you’re buying a home from overseas or navigating the U.S. real estate system for the first time, these tips will help you avoid costly delays:
- Work with an experienced real estate agent familiar with international buyers.
- Respond quickly to all lender and title company requests.
- Double-check time zones and email delivery times when communicating across borders.
- Set calendar reminders for CD review and CTC confirmation.
Want to learn about first-time buyer assistance programs in Texas?
Useful Resources & Internal Links
- Your Closing Checklist (CFPB)
- Understanding Loan Estimate vs. Closing Disclosure (CFPB)
- Homebuyer Assistance Programs in Texas
Final Thoughts
Getting to the finish line in a real estate deal isn’t just about signing the dotted line—it’s about understanding what you’re signing. The more informed you are about key documents like the HUD-1, CD, and CTC, the fewer surprises you’ll face.
Buying a home is a big decision. Make sure you go into it with your eyes open and your paperwork in order.
Have questions about real estate documents or the closing process? Drop them in the comments below or explore more of our real estate guides.
