Who needs a Form HUD-1?
The HUD-1 Settlement Statement is designed by US Department of Housing and Urban Affairs (HUD). The form is used in real estate transactions involving federal mortgage loans for the purchase of real estate. The HUD-1 should be completed by the agent conducting the settlement as part of the overall process of closing the sale.
What is Form HUD-1 for?
This form is designed to give a statement of actual settlement costs representing all the costs (including payments for the escrow and on mortgage loan) associated with the object of the transaction and relates them to either a seller or a buyer. The compilation of this form is preceded by the Good-Faith-Estimate (the estimated amount of fees and costs at the time of the transaction's end) provided by a lender to a borrower. The final amounts at closing may differ from the previously announced, so such difference of the final sums is reflected in HUD-1 Statement.
In case you are a buyer, Form HUD-1 will show you how much the property is going to cost. If you are a seller, you will know how much you can receive from the transaction.
Is Form HUD-1 accompanied by other forms?
As mentioned above, completing HUD-1 Statement is preceded by providing the GFE document required by the Real Estate Settlement Procedures Act. The Estimate act should be provided by a lender to a borrower in three days from the time when the creditor received a notice from the borrower about a mortgage loan closing.
Additional pages may accompany the HUD-1 for the purpose of including customary recitals and information used locally in settlements. These can be documents testifying the delay of monthly mortgage payments, the previous money transfers between a buyer and seller, etc.
How do I fill out Form HUD-1?
The entire document is just three pages, each of which is divided into two parts: the seller’s and the buyer’s (the buyer is known as the “borrower” because the HUD-1 is meant to specify closings involving lender financing).
The first page contains general information about the object of sale, the parties involved in the transaction and their settlement agent. Also, the summaries of borrower’s and seller’s transactions are presented. The first page can be filled in the last turn, as it only summarizes the information given on the next two pages.
The second page specifies the following list of settlement charges:
- Total real estate broker fees;
Items payable in connection with loan;
Items required by lender to be paid in advance;
Reserves deposited with lender;
Title charges;
Government Recordings and transfer charges;
Additional settlement charges.
You will go through the following topics on the third page comparing estimated charges that were shown on the Good Faith Estimate and the actual loan and closing charges:
- Comparison of Good Faith Estimate and HUD-1 charges;
Charges that in total cannot increase more than 10%;
Charges that can change;
Loan terms.
Where do I send Form HUD-1?
Two copies of the completed Form HUD-1 must be kept by the seller and the buyer. It is important to save HUD-1 for a tax preparer of both. It will be needed in the year of purchase or sale of the property.