Understanding
Your HUD-1
Settlement Statement
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You determined what you
can afford, shopped
for the best loan for you, found
the right house, and survived escrow - almost.
So, after all the hard work, it's time to
close, but don't forget to bring your GFE
(the Good Faith Estimate you received when
you applied for your loan at the beginning
of escrow) to compare with the charges listed
on the HUD-1 Settlement Statement. It's
a good idea to review your HUD-1 before
you get to the closing table. Let your escrow
officer and lender know that you want to
receive a completed HUD-1 at
least one day prior to your
settlement.
Settlement
Your closing may be conducted by your lender
or title insurance company, your escrow
company, your attorney or the seller's attorney.
Regardless of who performs the settlement,
there will be many important documents you'll
need to sign. Make sure you
carefully read and understand all the documents
before you sign them. Don't
be afraid to ask the lender any questions
you have about your loan documents.
HUD-1
Settlement Statement
The HUD-1 Settlement Statement is a form
that lists all charges and credits to the
borrower(s) and seller(s) in a transaction.
You have the right under RESPA to inspect
the HUD-1 Settlement Statement before
settlement occurs. When you receive a copy
of the HUD-1, compare it to your GFE. Ask
the lender questions about any changes in
fees between your GFE and
the HUD-1. Your lender must reimburse you
if a closing cost tolerance was violated.
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100
– 300 Series, Summary of BORROWER’s
Transactions
The
first page of the HUD-1 summarizes all of
the charges and credits to the buyer and
seller. |
Line
101 - contract sales price.
Line
103 - total settlement
charges from page 2.
Lines
106-112 - items you reimburse
the seller for that they already paid,
such as property taxes or HOA dues.
Line
120 - total of the 100
series section and is the total amount
you owe.
Lines
200-209 - credits for
items already paid by you, such as the
Earnest Money Deposit (Good Faith Deposit)
and other credits from the seller and
other parties.
Lines
210-219 - prorated items
Borrower needs to
pay (due after settlement;
ex: property tax/assessments,
utilities
used but not paid for by Seller, rent,
interest on loan assumptions).
Line
220 - total of all credits
from Lines 201 - 219 (Line 120 minus Line
220).
Line
303 - the amount you must
bring to settlement or the
amount
you will receive.
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700
Series - Total Real Estate Broker Fees
This section of the settlement statement
shows the commissions paid to the real estate
agents. There are no corresponding lines
on the GFE because the lender does not require
this service before you get your loan.
800
Series, Items Payable in Connection with
Loan
Line
801 - Lists the lender's
charge (and mortgage broker's, if used)
for getting you the loan, and references
GFE Block 1.
Line
802 - Lists either the charge
for the interest rate (points) or a credit,
and references GFE Block 2.
Line
803 - This is the sum of
Lines 801 and 802, and references Block
A on the GFE.
Line
804 - The charge for the
appraisal report prepared by an appraiser,
and references GFE Block 3.
Line
805 - The fee for a credit
report showing your credit history, and
references GFE Block 3.
Line
806 - The fee paid to a
tax service provider for information on
the property taxes, and references GFE Block
3.
Line
807 - The fee paid to the
service providing information on whether
the property is in a flood zone, and references
GFE Block 3.
Lines
808 and any additional lines
- Used to list other third party services
required by your lender, including FHA or
VA fees.
900
Series - Items Required by Lender to be
Prepaid at Settlement
Line
901 - Lists the daily interest
charges collected for the period between
the date of your settlement and the first
day of the next month (disclosed in Block
10 of GFE). If this amount was calculated
using the same loan closing date as shown
on the GFE, the charges would be the same
on both. This amount may differ from the
amount on the GFE if the settlement date
changes.
Line
902 - Lists the charge for
any up-front mortgage insurance premium
payment due at settlement. This is one of
the charges disclosed in GFE Block 3 of
your GFE.
Line
903 - The charge for the
homeowner’s insurance policy, and
is one of the charges disclosed in Block
11 of your GFE. If the homeowner’s
insurance was paid before the settlement
date, the charge will be listed as “P.O.C.
by borrower,” which means “Paid
Outside of Closing”. You typically
have to bring a pre-paid insurance policy
to your settlement.
1000
Series, Reserves Deposited with Lender
This
section lists the amounts collected by the
lender to be placed in your escrow (or,
impound) account for payments that will
need to be paid in the future of items,
such as homeowner’s insurance, mortgage
insurance and property taxes.
Line
1007 - An adjustment to
make sure lenders are only collecting the
maximum amount allowed by law. Even if the
first year’s homeowner’s insurance
premium has already been paid, the lender
will start ‘escrowing’ money
to pay the next bill.
1100
Series - Title Charges
Line
1101 - Lists the charge
for all title services and the lender’s
title insurance policy. Title services include
any service involved with providing title
insurance, such as title examination, preparing
the title commitment, clearing title to
the property, preparing and issuing title
policies, and conducting the settlement.
These charges correspond to GFE Block 4.
Line
1102 - The amount of the
settlement or closing fee if performed by
a company different from the one providing
title insurance. This charge is part of
the charge listed in Line 1101.
Line
1103 - Lists the charge
for the Owner’s title insurance policy,
if you decided to buy one. It corresponds
to Block 5 of the GFE.
Line
1104 - Lists the charge
for the Lender’s title insurance policy
which is part of the charge listed in Line
1101.
Line
1105 - The Lender’s
title policy limit. It is often lower than
the value of the property because it only
covers the amount of your Lender’s
lien on your property.
Line
1106 – Lists
the Owner’s title policy limit; this
is typically the purchase price paid for
the property.
Line
1107 – Lists
the portion of the title insurance premiums
retained by the title insurance agent.
Line
1108 – Lists the portion
of the title insurance premiums retained
by the underwriter.
1200
Series, Government Recording and Transfer
Charges
Government
recording charges listed in the 1200 series
are charges paid to state and local governmental
agencies to record important documents such
as the deed and mortgage or deed of trust
and transfer taxes to legally transfer property.
Line
1201 – Lists all government
recording charges,and corresponds to Block
7 of your GFE. This represents the cumulative
amount the borrower is paying for government
recording charges.
Line
1202 - Itemizes specific
recording charges for the deed, the mortgage,
and any releases of prior liens against
your property shown in Line 1201. When the
seller pays for an item, such as a release,
the charge is listed in the seller’s
column.
If, for example, the borrower
is paying $50.00 of the recording charges,
and the seller is paying $15.00. The total
paid for the government recording charges
was $65.00.
Line
1203 – Lists the charge
for transfer taxes, which are charged by
state or local government to transfer real
property, or place a new lien (mortgage
or deed of trust), on a property. This is
listed in Block 8 of your GFE.
Lines
1204–1205 - Itemize
the charges for transfer taxes listed in
Line 1203.
Line
1206 - Can be used to list
additional items related to recording or
transfer charges.
Series
1300, Additional Settlement Charges
Line
1301 - The total of required
lender services for which you chose the
provider (other than title services). These
services are itemized in the lines below
1301, and are listed in Block 6 of your
GFE.
In addition to services the
loan originator required, there may be additional
services that you chose. In our example,
Line 1304 lists a homeowner’s warranty
to provide protection for your home’s
mechanical systems and appliances. A charge
for a pest inspection or survey will appear
as a line item, if the borrower elected
to obtain an inspection or survey that was
not a condition of the loan or required
by the lender.
Line
1400 - The total
of all charges listed in page 2 for the
seller and you, the buyer. These totals
are also listed on page 1. Your charges
appear in Section J, Summary of the Borrower?s
Transaction, on Line 103. The seller’s
charges are listed in Section J, Summary
of Seller’s Transaction, on Line 502.
Paid
Outside Of Closing ("POC"):
Some fees may be listed on the HUD-1 to
the left of the borrower’s column and marked
"P.O.C." Fees such as those for credit reports
and appraisals are usually paid by the borrower
before closing/settlement. They are additional
costs to you. Other fees such as those paid
by the lender to a mortgage broker or other
settlement service providers may be paid
after closing/settlement. These fees are
usually included in the interest rate or
other settlement charge. They are not an
additional cost to you. These types of fees
will not be added into the total on Line
1400.
Page
3 of the HUD-1
The
third page of the HUD-1 is made up of two
sections: the Comparison Chart and the Loan
Terms. The Comparison Chart will help you
compare the charges disclosed on your GFE
and the actual charges listed on page 2
of the HUD-1. The Loan Terms section can
assure you that the loan you applied for
is the loan you received at settlement.
This section should compare with the “Summary
of Your Loan” on page 1 of the GFE.
Comparison
Chart
There are three
categories in the Comparison Chart:
1.
Charges that could not increase at settlement
2.
Charges that in total could not increase
more than 10%
3. Charges that could change.
Compare
the charges listed in the GFE column with
the charges in the HUD-1 column. If the
charges that cannot increase have increased
or the total of the charges that cannot
increase more than 10% have exceeded the
10% increase limit, the lender must reimburse
you at settlement or within thirty (30)
days after settlement.
In
the example above, the “Charges That
In Total Cannot Increase More Than 10%”
were only increased by $70 or 4% and did
not exceed the 10% tolerance.
For
the category “Charges That Can Change”
in this example the borrower selected a
pest inspection and survey provider that
were not on the written list.
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