Explaining the HUD Settlement Statement

The Hud-1 Settlement Statement is a form that lists all charges and credits to the borrower. This document should be compared to the Good Faith Estimate so that they match before settlement occurs.


Going through the pages of the HUD-1 and understanding what the lines mean will be valuable as you compare the loan options. The first page of the HUD-1 summarizes all the charges and credits to the buyer and seller. Each line explains what the amount is for but some need more explanation. For example Lines 106-112 includes items you are reimbursing the seller for what has already been paid like property taxes or homeowner association dues. Lines 200-209 includes credits that are paid by you like earnest money deposit and other credits from the seller and other parties. The next lines 210-219 are the credits that are owed by the seller after closing.


The total paid by/for borrower is on line 220 which is the total of lines 210-219 that has been subtracted by the Gross Amount due from borrower. The last line of the HUD-1 indicates whether the borrower has to bring cash to close or what they will receive.


On page 2 of the HUD-1 it has the total Real Estate Broker Fees but there shouldn’t be anything on this because the lender does not require this service before you get your loan. The next section is the Items Payable in Connection with Loan. This section refers back to what is on your GFE to make sure the two documents match.


Line 901 lists the daily interest charges that are collected for the period between the date of your closing and the first day of the next month. It should match Block 10 from your GFE. The next lines include charges from any mortgage insurance payments and the homeowner’s insurance policy. These lines all depend on the lender on whether the items are required or not.


The next series includes the amounts that is placed in your escrow account for future payments for homeowner’s insurance, mortgage insurance, and property taxes. These pages of the HUD-1 are very similar to your GFE so make sure you compare the two and if there are any discrepancies please notify the lender.


Page 3 of the HUD-1 involves two sections, the Comparison Chart and the Loan Terms. The Comparison Chart will help with comparing the charges disclosed on your GFE and the charges listed on page 2 of the HUD-1. The Loan Terms category will indicate the loan you applied for originally and is similar to the Summary of Your Loan in the GFE.


You must pay attention to the last section because it clarifies the terms of your loan. This section includes the loan amount, your interest rate and monthly payments. It discloses your monthly escrow payment information as well. Whether the terms of your loan are subject to increase is also indicated. Before you sign anything once again make sure the loan terms match the ones on your GFE.

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