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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.

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