What is a HUD-1 Settlement Statement?

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Settlement Charges

Settlement charges also called the section L and feature prices that both parties are supposed to pay to transfer the title and complete the transaction. Costs on the left column are paid by the buyer, and costs shown in the right column must be paid by the seller. The settlement charges are segregated into 7 different categories. These are as follows:

700 Total Real Estate Broker Fees

This is the amount that must be paid to the respective broker for buyer and seller. It is generally deducted from the amount deposited.

701 and 702 Used simultaneously to fill up amount

701 and 702 Used simultaneously to fill up amount for the two brokers for respective parties 703 Denotes whichever fund (buyer or seller) the commission is paid from 704 Additional charges.

800 Items Payable in Connection with Loan

These charges are levied to process the mortgage to the buyer or the seller. The costs listed here are carried forward from the good faith estimate.

801 The cost of mortgage processing. Often debited

801 The cost of mortgage processing. Often debited from the buyer’s side. 802 Points paid to the lender for a discounted rate of interest. Paid by the buyer often.  803 Applies if you have negotiated to a revised origination fee which is less than the initial quote by the lender 804 Charges paid to the home appraiser. Paid by the seller most of the time. 805 Charges paid to the buyer’s agent for generating the credit report. Paid by the buyer. 806 Real estate taxes. 807 Paid to flood certification companies. Mostly paid by the seller.  808-811 Additional costs associated with processing the mortgage.

900 Items Required by Lender to be Paid in Advance

These charges are connected to HOA, taxes, and escrow and must be sorted out before the lender can begin the underwriting process.

901 Interest paid by the seller during his stay in

901 Interest paid by the seller during his stay in the home. 902 The mortgage insurance premium paid by the seller during his stay in the home. 903 HOA insurance paid by the seller. 904 Additional costs that must be cleared before mortgage underwriting.

1000 Reserves Deposited with Lender

These costs must be paid by the buyer to the respective third parties. They may also be paid as deposits so that the lender can pay them on their behalf. The sellers can also promise to pay some of the costs and hence they will be paid by the seller in advance.

1001 If the buyer has set up an escrow account and

1001 If the buyer has set up an escrow account and wants to place the deposit in that account it will show up on the buyer’s side 1002 HOA advances could be paid by the buyer for a year in advance. Any adjustments between the buyer and the seller are adjusted accordingly.  1003 Advances for the mortgage insurance accrued in the same fashion as HOA advance.  1004 Property tax advance paid according to the state or county.  1005-1006 Additional advances. 1007 Total amount for 1000.

1001 Title Charges

These costs are paid to the escrow and title company. Most of the time they are paid by the buyer but sellers may also pay if there is a mutual agreement between both parties.

1101 Cost of lender’s title services paid by the b

1101 Cost of lender’s title services paid by the buyer. 1102 The cost incurred to complete the closing process. 1103 The cost paid by the buyer to ensure the title remains in their name if the seller defaults 1104 The cost paid to ensure the lender is not liable for the mortgage payment if the buyer defaults.  1105 The insurance amount that safeguards the lender in case of a default. 1106 The insurance amount that safeguards the buyer in case of a default. 1107 The amount that the agent is entitled to in case of a default. 1108 The amount that the underwriter is entitled to in case of a default.

1002 Government Recording and Transfer Charges

These costs are paid to the government for recording the deed and transferring the title to the buyer’s name.

1201 The cost of recording and documenting the dee

1201 The cost of recording and documenting the deed. 1202 Costs to record the deed, cost to record the mortgage and cost of the release. 1203 Cost of transferring the deed 1204 Costs for stamps, county tax, or city with respect to the deed and mortgage. 1205 Same costs 1204 for a state. 1206 Other costs incurred to record the deed.

1003 Additional Settlement Charges

1300 is for additional third-party closing charges such as additional costs for escrow, inspection fee, etc.

What Is a Reverse Mortgage?

A reverse mortgage is a type of loan for individuals aged 62 and older. The equity in a home can be used to borrow against in order to receive a lump-sum payment, a fixed stream of income, or a line of credit. The amount borrowed becomes due when the homeowner dies, relocates, or sells the home.

Whats Included in a HUD-1 Form?

Oddly, the HUD-1 is meant to be reviewed verso, or reverse side, first. The reverse side has two columns: The left-hand column itemizes the borrower's charges and the right-hand column itemizes the seller's charges.

The borrower’s list includes charges related to the mortgage, such as a loan origination fee, discount points, payment for a credit report, and fees for the appraisal and flood certification. It also may include any prepaid interest charges, homeowner’s insurance fees, property taxes, owner’s and lender’s title insurance, and the closing agent’s fees.

The itemized seller list may itemize the real estate commission, any contractually agreed-upon credit to the buyer, and mortgage pay-off information. The seller's itemized charges typically are lower than the buyer's charges.

The figures on the HUD-1 verso (back page) are added up, and the totals are carried to the form's recto, or front side. The amount of cash required to be paid by the borrower and the amount to be paid to the seller appear at the bottom of the front page.

Summary of Borrower’s Transaction

This section gives an account of all cost components that are debited from or credited to their account. This section is divided into 3 major parts called the 100s, 200s, and 300s. The summary of seller’s transactions is listed opposite to this table as anything debited from the buyer is credited to the seller and vice versa.

100 Gross amount due from the borrower

The buyer is supposed to pay these costs.

101 Gross sales price of the property the buyer is supposed to pay.

102  The price of any appliance or other article that the buyer wants to purchase with the home and must pay to the seller.

103 Total settlement charges due on the buyer. The detailed break up of settlement charges is given in the last section 1400.

Adjustment for items paid by the seller in advance

The costs that the seller has agreed to pay instead.

106 Taxes with respect to the town or city where t

106 Taxes with respect to the town or city where the property is located. 107 Taxes levied according to the respective county upon the sale of a property. 108 Assessments are charges paid by the seller for property inspection, appraisal, etc. 120 The total amount that the buyer must pay.

200 Amount Paid by or on Behalf of Borrower

This section lists cost components that the buyer will receive during the closing process.

201 The amount paid as earnest money during accept

201 The amount paid as earnest money during acceptance of the offer and credited to the buyer and debited from the seller’s account listed on 501 or 506. 202 This is the new loan amount paid to the buyer.  203 This cost applies if the buyer is transferring the title using an existing loan. 204 – 209 These are miscellaneous costs that the buyer was promised to pay by the seller after negotiation.

Adjustments for items unpaid by seller

The costs that the seller has refused to pay instead.

210 Taxes with respect to the city or town where t

210 Taxes with respect to the city or town where the property is located.  211 Taxes paid by the seller to the respective county. 212 Assessment charges for inspection etc. 213-219 Additional or miscellaneous charges. 220 The total amount of all the items under 200.

300 Cash at Settlement from/to Borrower

This section will have entries provided the buyer has decided to opt for a cash payment.

301 The total amount that the buyer must pay in ca

301 The total amount that the buyer must pay in cash. 302 The total amount of all the items under 200 in cash. 303 Shows if the money is going to the buyer or vice versa.

When do I receive a HUD-1 Settlement Statement?

In accordance with the Real Estate Settlement Procedures Act (RESPA), borrowers must receive a copy of the HUD-1 Settlement Statement at least one day before settlement. In reality, as utility charges and rental information (in an investment property) are often collated at the last minute, this form is not always tabulated until shortly before the closing.

When Is a HUD-1 Used in 2020?

The HUD-1 settlement statement is still used in 2020 for reverse mortgages. These types of mortgages are very popular with sellers over the age of 62 who want to pull equity out of their homes.

Lenders will also often ask for a copy of an old HUD-1 to prove the date the property closed during the three- to 10-year period following a short sale prior to 2015.

Understanding the HUD-1 form

The three pages of the HUD-1 form include a summary of all the costs associated with the mortgage (page 1), an itemized list of each expense (page 2) and a comparison between your initial loan estimate and the final settlement (page 3). Here’s a rundown of everything you’ll see:

  • Commission fees due to real estate agents
  • Loan charges, including origination fee, prepaid points, appraisal costs and any fees for tax services, flood certification and credit reports
  • Advance payments for per diem interest, homeowners insurance and mortgage insurance
  • Escrow deposits for homeowners insurance, mortgage insurance and property taxes
  • Costs for title services and title insurance
  • Fees for government recording services
  • Your loan amount, interest rate and monthly payment

Pay especially close attention to page 3. This is where you can easily compare costs with the initial loan estimate, and it includes a guide on which charges are allowed to change from that estimate and by how much.

Additionally, this page includes key questions that could impact your long-term financial well-being, including whether your interest rate can increase and whether you can be penalized for paying off your balance early.

Mortgages that require a HUD-1 statement

The HUD-1 form used to be furnished in most real estate transactions, but today, it doesn’t play a role in typical home purchases. If you receive a HUD-1 form nowadays, you’re likely dealing with one of these specific types of mortgages:

  • Reverse mortgage: If you’re an older homeowner tapping your equity via a reverse mortgage, you’ll receive the HUD-1 statement.
  • Refinance: If you’re refinancing your mortgage, you might receive the HUD-1 form, but not always. You could instead receive a closing disclosure — more on that below.

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