When it comes time to close on your home everyone has questions when it comes time to review the HUD-1 document before actual closing. Below is a quick reference to help you better understand the HUD-1, but your lender is the true expert in breaking this down.
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.