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 real estate 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.
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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