HUD-1,Closing,Statements,@font business, insurance HUD-1 Closing Statements

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@font-face { font-family: "Arial";}@font-face { font-family: "-3 ";}@font-face { font-family: "Cambria Math";}@font-face { font-family: "Calibri";}@font-face { font-family: "Cambria";}p.MsoNormal, li.MsoNormal, div.MsoNormal { margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: Cambria; }p.MsoNoSpacing, li.MsoNoSpacing, div.MsoNoSpacing { margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: Cambria; }.MsoChpDefault { font-family: Cambria; }div.WordSection1 { page: WordSection1; }If you are about to purchase orrefinance a home, then you will be faced with the task of reading andunderstanding a HUD-1 Settlement Statement. A HUD-1 Settlement Statement isprovided by a mortgage lender or broker as required by the Real EstateSettlement Procedures Act (RESPA).  The HUD-1 itemizes the costs and fees associatedwith the financing of a property, and it's important that a buyer carefullyreview the statement for accuracy and fairness. Like a tax form or any othergovernment document, the HUD-1 Settlement Statement features a variety ofsections that are of importance to buyers and sellers.  There are 12 sections on the form asrequired by law, some of which contain sub-sections and additional line items.One of the best ways to better understand the HUD-1 Settlement Statement formis to look at it section by section.  To do that, here is a short summary ofsome of the most important sections that buyers and sellers should be aware ofon the HUD-1 Settlement Statement form: HUD-1 Sections A, B, C, D, E, F, G, Hand I.  Sections A through I are very general.They contain basic information about the type of loan being used to pay for theproperty, as well as personal information (e.g., addresses, date oftransaction, location of the property, etc.). When reading a HUD-1 SettlementStatement, it is important to verify that the names and addresses on the formare complete and accurate.  HUD-1Section J Section J on a HUD-1 SettlementStatement contains details and information that pertain primarily to theborrower. The borrower’s costs, credits, and net amount owed for the purchaseof the property are carefully outlined in section J. The following sub-sectionsrelated to the borrower’s responsibilities are important parts of Section J:100.  Gross Amount Due from Borrower: Thisline contains the amount that the borrower owes. The amount owed is determinedby the price of the property, fees, settlement charges, taxes that were prepaidby the seller, and any extra items on the property (e.g., appliances). SectionJ: 200.  Amounts Paid or On Behalf of Borrower:This line contains any money that has already been put toward the purchase ofthe property by the borrower. Any deposit, financing, or money that the sellerowes (e.g., unpaid taxes, repair costs, etc.) will be calculated into the totalamount on this line. Section J: 300.  Cash at Settlement from/to Borrower:This line contains the actual amount of cash that the borrower must have inhand at the time of settlement.  Section J is important on the HUD-1Settlement Statement because it serves as the balance and checkpoint for anymoney owned by the borrower, any credits toward the borrower’s balance, and anymoney that the seller might still be responsible for. Review this sectioncarefully.  HUD-1Section K Section K on a HUD-1 SettlementStatement contains details and information that pertain to the seller. It isbasically a summary of the seller’s transaction. Here you will find a figurethat is the gross amount due to the seller, as well as adjustments that havebeen made for items like past due taxes or taxes paid in advance.  HUD-1Section L Section L on a HUD-1 SettlementStatement contains detailed information about the financing and processing ofthe sale or refinancing of the home. The following sub-sections related to thesettlement charges are important parts of this section:  Section L: 700. Total Sales/Broker’sCommission Based on Price: This line shows the total amount of the real estatebroker’s commission charges.  Section L: 800. Items Payable inConnection with Loan: This line shows all of the fees associated with the homeloan, including the origination fee, appraisal fee, credit report fee, andapplication fee for the mortgage. The amount on this line is typically paid outof pocket by the borrower and will not reflect in the total charges for thesettlement on line 1400.  Section L: 900. Items Required byLender to Be Paid in Advance: This line shows any monies that must be paidbefore the settlement and may include the interest on the loan before the firstpayment is due, mortgage insurance, and/or home insurance.  Section L: 1000. Reserves Depositedwith Lender: This line shows escrow items and there is a limit to how much alender can require to be deposited. The money here will cover future expenseslike property taxes.  Section L: 1100. Title Charges: Thisline shows the amount due for legally changing the ownership of the property.It includes the closing fee, title examination fee, and any associatedattorney’s fees. Sometimes this line is payable to a third party, depending onhow the title change has been handled.  Section L: 1200. Government Recordingand Transfer Charges: The borrower is usually responsible for paying the deedfee, as well as any fees required by the city, county, or state to transfer theownership of the property. All of these costs are listed together in total onthis line.  Section L: 1300. Additional SettlementCharges: This line is reserved for any additional settlement charges notincluded in any previous lines in section L. The costs here could include homeinspections, surveying, or warranties.  Section L: 1400. Total SettlementCharges: Lines 700-1300 are added together and appear as the sum on line 1400.  With sections A through L on the HUD-1Settlement Statement, accuracy is of the utmost importance. Review and revisethese line items carefully, and double-check all figures. Don’t be afraid toask questions of your settlement agents if something is unclear.  GoodFaith Estimate One final note: Mortgage lenders orbrokers are required to provide borrowers with a Good Faith Estimate asrequired by RESPA. The Good Faith Estimate is documented on a form that matchesthe HUD-1 Settlement Statement. The HUD-1 is then required to be provided tothe borrower at least one day before closing. This will allow the borrower tocompare the actual costs and fees with the Good Faith Estimate.