CARL WATTS & ASSOCIATES

May 24, 2010


What is HUD-1?

The Real Estate Settlement Procedures Act (RESPA) requires that a standard real estate settlement form be used in all transactions which involve federally related mortgage loans - that form is HUD-1.

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HUD-1
Settlement Statement
Click the link for an online form HUD-1 form
First Page
Sections A through I contain basic information.
Sections J is a summary of the borrower’s transactions.
The amount owed by the borrower in sub-section 100 is determined by the price of the property, fees, settlement charges, taxes prepaid by the seller and any extra items on the property (e.g. kitchen appliances).

Sub-section 200 contains money already paid by the borrower for the purchase of he property (deposit, financing, unpaid taxes, repairs).

Sub-section 300 reflects the actual amount of cash the borrower must have at he time of the settlement.
REMEMBER

Consider settlement fees before making your purchase offer

Negotiate the terms of your settlement (which party pays certain fees) and have all your negotiations in writing.

Some settlements costs, such as insurance, may be higher if your credit rating is low; in most areas of the country the settlement costs will be about 3% of the price of the home.

Some costs may be reduced by shopping around for settlement services.
Accuracy is of utmost importance on the Settlement Statement so please revise carefully, double check all figures and don‘t hesitate to ask questions.
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Basically the HUD-1 itemizes all costs and fees involved with the financing of a property (even fees paid prior to closing).
The form is usually provided by the lender (or settlement agent) and should be carefully reviewed by both the seller and the buyer.

Settlement Charges - Section L

Sub-section 700 deals with the commission paid to real estate agencies (usually from the seller’s funds).

Sub-section 800 contains all the fees associated with the home loan, typically paid by the borrower; these will not reflect in the total charges for the settlement (line 1400).

Sub-sections 900 and 1000 show what needs to be paid before the settlement and the escrow items (for future expenses) respectively.

Title charges in sub-section 1100 reflect money due for legally changing the ownership of the property, including payments to attorneys and notaries, while sub-section 1200 shows charges payable to the city, county or state and the deed fee which is usually paid by the borrower.
Additional charges in sub-title 1300 may include home inspections, surveying or warranties.
The actual costs and fees should be com-pared with the Good Faith Estimate which is documented on a form similar to the HUD-1 and provided by the lender to the borrower within three days of loan application.

Section K contains the gross amount due to the seller as well as adjustments made for items paid in advance.
Some entries in these sections reflect the detailed information in Section L on the following page.