HUD 1 Statement and what it all means
The HUD 1 Statement, also known as the closing or settlement
statement is an important piece of paper in any transaction involving
real estate. It provides you with key information on your purchase
of a home or refinancing loan including the price that you are
paying, your interest rate and any and all charges from the mortgage
lender involved in generating your mortgage loan. The HUD 1 is
long and look complicated, but is pretty simple and provides a
lot of key information.
The first part of the statement provides basic information on
who is buying the home, who is selling the home, the lender and
the property address. Below this information is a summary of the
borrower’s side of the transaction and the seller’s
side of the transaction. This is important to review as it spells
out in detail how much you are paying for the home, the amount
of your down payment, the principal amount of the new loan and
any adjustments that you are being paid for by the seller. It
then summarizes the amount of cash, including your down payment
that you will need to bring to closing.
One of the most important parts of the HUD 1 is the statement
of settlement charges and who pays them. This area includes all
fees charged by various parties to the transaction including the
commission paid to the real estate agent, the loan origination
fee, any amounts that will be held in reserve or escrow each month
to pay ongoing bills and any title charges that are paid to generate
the mortgage loan. This information is broken down in two columns
and specifies if it is being paid by the seller or the borrower.
The HUD 1 is key to understanding what you are paying for your
mortgage and for your new home. Take the time to review it and
if you have any questions at all, don’t be intimidated and
ask your mortgage lender or closing agent to explain to you the
information you don’t understand.