Understanding the HUD-1 Statement – A Home Buyers View

When you purchase a home and use a lender the government requires that receive a HUD-1 form, also known as the “Settlement Statement”. The purpose of this form is to give you a final accounting of the costs and credits associated with the purchase/sale of a home. The HUD-1 provides this information for both the buyer and the seller.

In this post we will talk about the buyer’s side of the closing statement (HUD-1).

Click here to download a copy of the HUD-1 form so you can follow along with this post.

One the first page of the HUD-1 statement is a summary of the amounts due from the buyer, amounts already paid by the buyer (such as deposit or earnest money), amounts the buyer is being credited for (taxes not yet paid)  and finally any amounts the buyer must bring to the table at settlement. On page two of the HUD-1 are the itemized the costs paid by the buyer, which are broken down into six sections:

1.    800 “Items Payable in Connection with Loan”
2.    900 “Items Required by the Lender to be Paid in Advance”
3.    1000 “Reserves Deposited with Lender”
4.    1100 “Title Charges”
5.    1200 “Government Recording and Transfer Charges”
6.    1300 “Additional Settlement Charges”

Finally on page three is a comparison of actual charges from the HUD-1 to those provided on the Good Faith Estimate.  There is also a section summarizing details of the loan terms.

THE HUD-1 Section by Section

Section J – Summary of Borrower’s Transaction
100 Gross Amount Due from Borrower
101 Contract sales price – purchase price agreed to in the purchase contract.
102 Personal property – the agreed upon price for any personal property excluded in the above and could include such items as drapes, appliances, carpets, etc
103 Settlement charges to borrower (line 1400) – summary of items detailed in Section L
104 – 105 – for additional amounts that may be owed by the buyer

Adjustment for items paid by seller in advance
106 City/Town Taxes – taxes the seller has paid for that are for a period that extends beyond the closing date
107 County Taxes – taxes the seller has paid for that are for a period that extends beyond the closing date
108 Assessments – assessments the seller has paid for that are for a period that extends beyond the closing date
109 – 112 – any other items prepaid by the seller: fuel or other supplies on hand, etc

120 Gross Amount Due from Borrower – the total of items listed in lines 101 – 112

200 Amount Paid by or in Behalf of Borrower
201 Deposit or earnest money – any amount paid against the sales price
202 Principal amount of new loan(s) – amount of purchase price being financed through loans
203 Existing loan(s) taken subject to – for any existing loans or liens being assumed by the buyer
204 – 209 – can be used for seller paid closing costs, allowances (typically made by builders), etc

Adjustments for items unpaid by seller
210 City/town taxes – taxes the seller has not paid for that are for a period prior to the closing date
211 County taxes – taxes the seller has not paid for that are for a period prior to the closing date
212 Assessments – assessments the seller has not paid for that are for a period prior to the closing date
213 – 219 – items used but not paid for by the seller such as utilities, rent collected in advance for periods extending beyond the closing date, etc

220 Total Paid by/for borrower – the total of items listed in lines 201 – 219
300 Cash at Settlement from/to Borrower – the result of item 120 minus item 220
301 Gross Amount due from borrower (line 120) – total from line 120
302 Less amount paid by/for borrower (line 220) – total from line 220

Section L – Settlement Charges

800 – Items Payable in Connection with Loan
801 Our origination charge – any amounts received for origination services, including administrative and processing services, performed by or on behalf of the loan originator
802 Your credit charge (points) for the specific interest rate chosen – any “point” charged to the borrower
803 Your adjusted origination charges – the total of items 801 and 802
804 Appraisal fee to – costs of appraisal
805 Credit report to – costs of credit report
806 Tax service to – costs for any tax service
807 Flood certification – costs for flood certification
808 – 811 – costs of any other third party services as required by the lender

900 – Items Required by the Lender to be Paid in Advance
901 Daily interest charges – interest on loan for the period of time between the closing date and the first mortgage payment
902    Mortgage insurance premium – prepayment of mortgage insurance premium (reserves recorded on line 1003)
903    Homeowners insurance – homeowners insurance payment required by lender (reserves recorded on line 1002)
904 Other lender required prepayments not including reserves

1000 Reserves Deposited with Lender
1001 Initial deposit for escrow account – amount required by lender to be “escrowed”, “impounded” or held in “trust” for future obligations.
1002 Homeowner’s insurance
1003 Mortgage insurance
1004 Property taxes

1005 – 1006 – other amounts as required by the lender, HOA dues or assessments, flood insurance etc
1007 Aggregate Adjustment – either a negative amount or zero to adjust the itemized amounts per HUD guidelines. This is calculated by the settlement agent to ensure the lender is not collecting more in escrow than is allowed

1100 Title Charges
1101 Title services and lenders title insurance – costs associated with the lender’s title insurance
1102 Settlement or closing fee – settlement or closing fee
1103 Owner’s title insurance – charges for the owner’s title insurance and endorsements
1104 Lender’s title insurance – charges for the lender’s title insurance and endorsements
1105 Lender’s title policy limit – amount of the lender’s policy limit
1106 Owner’s title policy limit – amount of owners policy limit
1107 Agent’s portion of the total title insurance premium – amount of premium retained by the title agent
1108 Underwriter’s portion of the total title insurance premium – amount of premium retained by the underwriter
1109 – 1111 – used to itemize title charges to third parties if any

1200 Government Recording and Transfer Charges

1201 Government recording charges – charges for recordation. Buyer pays deed and mortgage, seller pays release
1202 Deed, Mortgage, Release – charges for each category broken out.
1203 Transfer taxes – paid by seller
1204 City/county taxes
1205 State tax/stamps

1300 Additional Settlement Charges
1301 – 1305 – Additional services that the buyer can shop for such as survey, pest inspection or other similar inspection

Comparison of Good Faith Estimate (GFE and HUD 1/1A Charges (Page 3)

The information on page three allows the buyer to compare the numbers provided on the Goof Faith Estimate (GFE) to the actual amounts appearing on the HUD 1 statement.

First section compares numbers that cannot increase from the GFE. The next section covers expenses that increases cannot exceed 10% over those on the GFE and finally expenses that can change.

The last section of the page is a review of the Loan Terms: amount, term, rate, etc.

If you are feeling a bit overwhelmed by all of this, speak to your real estate agent, they are there to help. Remember part of an agent’s responsibility to their client is to help them understand forms like this and many others, and to make sure the client is confident in their understanding.

THE HUD-1 Section by Section
Section J – Summary of Borrower’s Transaction
100 Gross Amount Due from Borrower
101 Contract sales price – purchase price agreed to in the purchase contract.
102 Personal property – the agreed upon price for any personal property excluded in the above and could include such items as drapes, appliances, carpets, etc
103 Settlement charges to borrower (line 1400) – summary of items detailed in Section L
104 – 105 – for additional amounts that may be owed by the buyer

Adjustment for items paid by seller in advance
106 City/Town Taxes – taxes the seller has paid for that are for a period that extends beyond the closing date
107 County Taxes – taxes the seller has paid for that are for a period that extends beyond the closing date
108 Assessments – assessments the seller has paid for that are for a period that extends beyond the closing date
109 – 112 – any other items prepaid by the seller: fuel or other supplies on hand, etc

120 Gross Amount Due from Borrower – the total of items listed in lines 101 – 112

200 Amount Paid by or in Behalf of Borrower

201 Deposit or earnest money – any amount paid against the sales price
202 Principal amount of new loan(s) – amount of purchase price being financed through loans
203 Existing loan(s) taken subject to – for any existing loans or liens being assumed by the buyer
204 – 209 – can be used for seller paid closing costs, allowances (typically made by builders), etc

Adjustments for items unpaid by seller
210 City/town taxes – taxes the seller has not paid for that are for a period prior to the closing date
211 County taxes – taxes the seller has not paid for that are for a period prior to the closing date
212 Assessments  – assessments the seller has not paid for that are for a period prior to the closing date
213 – 219 – items used but not paid for by the seller such as utilities, rent collected in advance for periods extending beyond the closing date, etc

220 Total Paid by/for borrower – the total of items listed in lines 201 – 219
300 Cash at Settlement from/to Borrower – the result of item 120 minus item 220
301 Gross Amount due from borrower (line 120) – total from line 120
302 Less amount paid by/for borrower (line 220) – total from line 220

Section L – Settlement Charges

800 – Items Payable in Connection with Loan

801 Our origination charge – any amounts received for origination services, including administrative and processing services, performed by or on behalf of the loan originator
802 Your credit charge (points) for the specific interest rate chosen – any “point” charged to the borrower
803 Your adjusted origination charges – the total of items 801 and 802
804 Appraisal fee to – costs of appraisal
805 Credit report to – costs of credit report
806 Tax service to – costs for any tax service
807 Flood certification – costs for flood certification
808 – 811 – costs of any other third party services as required by the lender

900 – Items Required by the Lender to be Paid in Advance

901 Daily interest charges  – interest on loan for the period of time between the closing date and the first mortgage payment
902    Mortgage insurance premium – prepayment of mortgage insurance premium (reserves recorded on line 1003)
903    Homeowners insurance – homeowners insurance payment required by lender (reserves recorded on line 1002)
904    Other lender required prepayments not including reserves

1000 Reserves Deposited with Lender

1001 Initial deposit for escrow account – amount required by lender to be “escrowed”, “impounded” or held in “trust” for future obligations.
1002 Homeowner’s insurance
1003 Mortgage insurance
1004 Property taxes
1005 – 1006 – other amounts as required by the lender, HOA dues or assessments, flood insurance etc
1007 Aggregate Adjustment – either a negative amount or zero to adjust the itemized amounts per HUD guidelines. This is calculated by the settlement agent to ensure the lender is not collecting more in escrow than is allowed

1100 Title Charges

1101 Title services and lenders title insurance – costs associated with the lender’s title insurance
1102 Settlement or closing fee – settlement or closing fee
1103 Owner’s title insurance – charges for the owner’s title insurance and endorsements
1104 Lender’s title insurance – charges for the lender’s title insurance and endorsements
1105 Lender’s title policy limit – amount of the lender’s policy limit
1106 Owner’s title policy limit – amount of owners policy limit
1107 Agent’s portion of the total title insurance premium – amount of premium retained by the title agent
1108 Underwriter’s portion of the total title insurance premium – amount of premium retained by the underwriter
1109 – 1111 – used to itemize title charges to third parties if any

1200 Government Recording and Transfer Charges
1201 Government recording charges – charges for recordation. Buyer pays deed and mortgage, seller pays release
1202 Deed, Mortgage, Release – charges for each category broken out.
1203 Transfer taxes – paid by seller
1204 City/county taxes
1205 State tax/stamps

1300 Additional Settlement Charges

1301 – 1305 – Additional services that the buyer can shop for such as survey, pest inspection or other similar inspection

Comparison of Good Faith Estimate (GFE and HUD 1/1A Charges (Page 3)

The information on page three allows the buyer to compare the numbers provided on the Goof Faith Estimate (GFE) to the actual amounts appearing on the HUD 1 statement.

First section compares numbers that cannot increase from the GFE. The next section covers expenses that increases cannot exceed 10% over those on the GFE and finally expenses that can change.

The last section of the page is a review of the Loan Terms: amount, term, rate, etc.

If you are feeling a bit overwhelmed by all of this, speak to your real estate agent, they are there to help. Remember part of an agent’s responsibility to their client is to help them understand forms like this and many others, and to make sure the client is confident in their understanding.