Understanding Your HUD-1 Settlement Statement
If you’ve taken part in a real estate transaction, you may have received a settlement statement, also known as a HUD-1 from your closing agent or creditor. You may find yourself asking, what exactly is a HUD-1 Settlement Statement and how do I read it? MHQ - Mortgage Headquarters of Missouri is here to help you through all of your finance questions about buying or selling a home. Today we are going to discuss what a HUD-1 Settlement Statement is and how to read it.
What Is It?
A HUD-1 Settlement Statement was created to be used by your closing agent or creditor when taking part in a real estate transaction. HUD stands for Housing and Urban Development and you may have heard this document as being referred to as a closing statement or a settlement sheet. This document itemizes all charges between a borrower and a seller. The borrower would be the person who is purchasing the real estate and borrowing money in the form of a mortgage from a bank or a mortgage broker. The seller would simply be the person who is selling the real estate. Even if the buyer isn’t borrowing any money, they are still considered the borrower on this form.
Today, HUD-1 Settlement Statements are commonly used to settle reverse mortgages and for mortgage refinances. On October 3, 2015, a document known as the Closing Disclosure form has been put in place to take care of all other real estate transactions. The HUD-1 states all of the gross closing costs that is involved in a mortgage agreement and helps the buyer know exactly how much to make out their cashier’s check for.
How to Read It
The best way to break down a HUD-1 Settlement Statement is to print it out and go through each section one by one. This statement is a three page document and the first page is broken up into two columns, one for the borrower and the seller. It is a summary of both of their transactions pertaining to the real estate or mortgage transaction. The fees and transactions are written out more in depth on the second page of the document. The second page discusses all of the settlement charges within seven different sections. The final figure that is totaled up from these sections is placed in section 1400 labeled “Total Settlement Charges.” This figure is also taken to the front page to section 103 labeled “Settlement charges to borrower.”
After placing the total settlement charges figure onto line 103, additional fees that would be transferred over like city or county taxes and assessments should be filled out under this figure in sections 106 to 112. Section 200 is very important in the transaction because this is where any credits from the seller go. These credits are then taken out from the gross cost. Finally, the total gross figure that is calculated from entering these costs and transactions should be put in section 303. This is the amount that the borrower (or buyer) should take to the closing in some form payment like a cashier’s check.
Finally, the last thing to look at is page three which discusses the Good Faith Estimate (GFE). The GFE is used to compare rates and costs of loans with different lenders, so that borrowers can get the best possible rates. This breaks down the approximate payments that would be due when closing a mortgage loan with a certain bank or loaner. Again, the Closing Disclosure Form has replaced this on most mortgage loans, but you may still use it if certain situations like reverse mortgages or mortgage refinances.
Get Help from the Most Trusted Mortgage Professionals at the Lake of the Ozarks
We understand that the process of buying a home and taking out a mortgage can be a little complicated. Let MHQ Mortgage help simplify the process for you! Whether you’re in need of a mortgage while buying a new home, want to refinance your home or are thinking about reversing your mortgage, we are here to help you through the process and provide the resources you need. Give us a call today at (573) 302-9990 to learn more about your mortgage options.
What Is It?
A HUD-1 Settlement Statement was created to be used by your closing agent or creditor when taking part in a real estate transaction. HUD stands for Housing and Urban Development and you may have heard this document as being referred to as a closing statement or a settlement sheet. This document itemizes all charges between a borrower and a seller. The borrower would be the person who is purchasing the real estate and borrowing money in the form of a mortgage from a bank or a mortgage broker. The seller would simply be the person who is selling the real estate. Even if the buyer isn’t borrowing any money, they are still considered the borrower on this form.
Today, HUD-1 Settlement Statements are commonly used to settle reverse mortgages and for mortgage refinances. On October 3, 2015, a document known as the Closing Disclosure form has been put in place to take care of all other real estate transactions. The HUD-1 states all of the gross closing costs that is involved in a mortgage agreement and helps the buyer know exactly how much to make out their cashier’s check for.
How to Read It
The best way to break down a HUD-1 Settlement Statement is to print it out and go through each section one by one. This statement is a three page document and the first page is broken up into two columns, one for the borrower and the seller. It is a summary of both of their transactions pertaining to the real estate or mortgage transaction. The fees and transactions are written out more in depth on the second page of the document. The second page discusses all of the settlement charges within seven different sections. The final figure that is totaled up from these sections is placed in section 1400 labeled “Total Settlement Charges.” This figure is also taken to the front page to section 103 labeled “Settlement charges to borrower.”
After placing the total settlement charges figure onto line 103, additional fees that would be transferred over like city or county taxes and assessments should be filled out under this figure in sections 106 to 112. Section 200 is very important in the transaction because this is where any credits from the seller go. These credits are then taken out from the gross cost. Finally, the total gross figure that is calculated from entering these costs and transactions should be put in section 303. This is the amount that the borrower (or buyer) should take to the closing in some form payment like a cashier’s check.
Finally, the last thing to look at is page three which discusses the Good Faith Estimate (GFE). The GFE is used to compare rates and costs of loans with different lenders, so that borrowers can get the best possible rates. This breaks down the approximate payments that would be due when closing a mortgage loan with a certain bank or loaner. Again, the Closing Disclosure Form has replaced this on most mortgage loans, but you may still use it if certain situations like reverse mortgages or mortgage refinances.
Get Help from the Most Trusted Mortgage Professionals at the Lake of the Ozarks
We understand that the process of buying a home and taking out a mortgage can be a little complicated. Let MHQ Mortgage help simplify the process for you! Whether you’re in need of a mortgage while buying a new home, want to refinance your home or are thinking about reversing your mortgage, we are here to help you through the process and provide the resources you need. Give us a call today at (573) 302-9990 to learn more about your mortgage options.
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