The HUD-1 Explained
Sections A-I: Lender’s name and address, settlement agent info, buyer’s loan type, settlement date and property address.
Section L: Settlement Charges
Section 700: Agency Commissions
Section 900: Items Required by Lender to be Paid in Advance l Line 902: mortgage insurance premiums due at settlement. l Line 903: hazard insurance premiums paid at settlement for immediate insurance on the property. l Lines 904 and 905: miscellaneous items possibly collected by the lender, such as flood insurance, mortgage life insurance, credit life insurance and disability insurance premiums.
Section 1000 - Reserves Deposited with Lender l Itemization of funds collected from the borrower by the lender for costs like those in section 900, but lines 1001-1007 are used to start the borrower’s escrow account, from which the lender will pay the following year’s premiums. l Line 1008: escrow adjustment to make sure the lender is not collecting more escrow funds than are allowed.
Section 1100 - Title Charges
l Includes title examination, title search, document preparation, title insurance fees and closing agent and notary fees. l Line 1101: settlement agent's fee. l Lines 1102 and 1103: abstract or title search and examination fees. l Line 1104: title insurance binder charges (also called a commitment to insure). l Line 1105: deed preparation fees. l Line 1106: Notary public’s fee for authenticating the execution of the settlement documents. l Line 1107: attorney's fees. l Line 1108: total title insurance charge less the cost of the binder. l Lines 1109 and 1110: informational lines that disclose the costs for the separate title insurance policies for borrower and lender. l Lines 1111-1113: any other title-related charges.
Section 1200 - Government Recording and Transfer Charges
l Sections 1300 & 1400 - Additional Settlement Charges and Totals l Section 1300: survey and inspection fees. l Line 1400: total settlement charges paid from borrower's and seller's funds.
Section J, Summary of Borrower's Transaction
Section 100, Gross Amount Due from Borrower
l Line 101: property gross sales price. l Line 102: Charges for personal property (i.e., draperies, washer, dryer, outdoor furniture, and decorative items being purchased from the seller). l Line 103: borrower’s total settlement charges brought forward from Line 1400. l Lines 104 and 105: amounts owed by the borrower or previously paid by the seller. l Lines 106-112: items for which the seller has paid in advance. l Line 120: gross amount due from borrower.
Section 200, Amounts Paid By or In Behalf of Borrower
l Line 201: buyer’s credit in the amount of earnest money paid when the offer was accepted. l Line 202: the amount of the new loan, which is being paid to the borrower by the lender. l Line 203: used when loan is assumed by the borrower or taking title subject to an existing loan or lien on the property. l Lines 204-209: miscellaneous items paid by or on behalf of the buyer. l Lines 210-219: bills the seller has not yet paid. l Line 220: total of all items in Section 200. l Line 301: total amount due from the borrower. l Line 302: summary of all items already paid by or for the borrower. l Line 303: the difference between lines 301 and 302.
Section K, Summary of Seller's Transaction
Section 400, Gross Amount Due to Seller
l Line 401: gross sales price of the property. l Line 402: personal property. l Lines 404-405: other amounts owed by the borrower or previously paid by the seller. l Lines 406-412: items the seller has paid in advance. l Line 420: gross amount due to the seller.
Section 500, Reductions in Amount Due to Seller
l Line 501: the seller's real estate broker or another party holds the borrower's earnest money deposit and will pay it directly to the seller. l Line 502: from Line 1400, the seller's total charges as computed in Section L. l Line 503: If borrower is assuming or taking title subject to existing liens which are deducted from the sales price. l Lines 504-505: any first and/or second loans to be paid off as part of settlement. l Lines 506-509: miscellaneous entries. l Line 506: deposits paid to the seller by the borrower who is not the settlement agent. l Lines 510-519: bills the seller owes but has not yet paid. l Line 520: total for all items in Section 500.
Section 600, Cash at Settlement To/From Seller
l Line 601: gross amount due to the seller. l Line 602: total of reductions in seller's proceeds. l Line 603: the difference between lines 601 and 602, indicating a cash amount paid to seller.
The HUD-1 Explained
Law requires that the buyer and seller receive a copy of the HUD-1 (closing paperwork) at least one day before closing, ostensibly so they can check it over for errors. Even if changes are made at the last minute, it is crucial to take the time to read over the form to make sure that no errors have been made. What follows is an explanation of each Sec. of the HUD-1:
Sec. A-I: Lender info, settlement agent info, loan type, settlement date and property address.
Sec. L: Settlement Charges
Sec. 700: Agency Commissions
Sec. 900: Items Required by Lender to be Paid in Advance
Sec. 1000: Reserves Deposited with Lender
Sec. 1100: Title Charges
Sec. 1200 - Government Recording and Transfer Charges
Sec. 1300 & 1400 - Additional Settlement Charges and Totals
Sec. 1300: survey and inspection fees.
Sec. J: Summary of Borrower's Transaction
Sec. 100: Gross Amount Due from Borrower
Sec. 200: Amounts Paid By or In Behalf of Borrower
Sec. K: Summary of Seller's Transaction
Sec. 400: Gross Amount Due to Seller
Sec. 500: Reductions in Amount Due to Seller
Sec. 600: Cash at Settlement To/From Seller