Breaking Down the HUD-1 Settlement Statement

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The Settlement Statement, often referred to as the “HUD-1”, is a document that contains a detailed breakdown of the closing costs apportioned between the buyer and seller of property.

Typically, the closing agent (often a representative from the title company), gathers the pertinent information, completes the Settlement Statement and disperses the required funds once the buyer and seller have certified the accuracy of the statement by signing it.

The first page of the Settlement Sheet is broken down into a summary of the borrower’s (buyer) transaction on the left side and a summary of the seller’s transaction on the right. The second page is divided into those costs that are “paid from borrower’s funds at settlement” and those costs that are “paid from seller’s funds at settlement”. If buyer, seller and title agent agree that the statement is true and accurate, all parties sign and date the sheet toward the bottom of page two.

The following key sections of the HUD-1 should be thoroughly reviewed in any transaction:

Borrower’s Transaction:

Line 101 – Lists the contract price as stated in the Agreement of Sale

Line 103 – Total settlement charges to the borrower; this is obtained from adding up all of the costs on the second page and is also referenced in Line 1400.

Line 120 – This is the total amount due from the borrower inclusive of the contract price, costs listed on page two of the sheet and adjustments for taxes and other items paid by seller in advance.

Line 220 – States the total amount paid by or for borrower including deposit monies, principal loan(s) and Sellers Assist.

Line 303 – The figure here is the total amount of funds (in cash or certified check) that borrower needs to bring to settlement in order to close.

Lines 801-811– All of the costs associated with the loan such as origination fees, appraisal fee, credit report fee, processing fee, administration fee and flood certification fee are listed. If any of the fees are “lender retained”, which is indicated by the abbreviation LR, then this amount was subtracted from the amount of funds actually wired by the lender to the title company.

Lines 901-905 – Any amounts that are required by the lender to be paid in advance, such as daily interest, is set forth here. For example, if Buyer settles on May 20, 2008, the lender will likely require that the Buyer pay in advance daily interest on the loan through June 1, 2008.

Lines 1001-1009 – All reserves that the lender requires to be set aside in an escrow account such as hazard insurance, county taxes, and school taxes are set forth.

Lines 1101-1113 – Includes all charges associated with the Buyer’s title insurance such as the insurance premium, search fee, examination fee, endorsements, closing service letter and overnight wire fee.

Lines 1201-1203 – Details the recording fees charged by the county to record the deed and mortgage and sets forth the proportionate share of the real estate transfer taxes for Buyer and Seller.

Seller’s Transaction:

Lines 406-412 – Adjustments are made for items, such as taxes, that Seller has already paid in advance of settlement. For example, if settlement takes place on June 1, 2008 and Seller has already paid county taxes through the end of 2008, then Seller must be reimbursed from the date of closing (June 1, 2008) through the end of the year.

Lines 501-509 – Itemizes all reductions in the amount that Seller would otherwise walk away with from the settlement table, such as existing mortgages that must be paid off and Seller’s settlement charges (as listed on Line 1400 on page 2).

Line 603 – This is the total amount of funds that Seller nets on the transaction, which is typically dispersed by way of a check from the title agent.

Lines 701-702 – Sets forth the total commission that Seller must pay to the real estate agents involve in the transaction. This is typically the Seller’s single largest cost at settlement.

Lines 1201-1203 – The Seller is also responsible for a share of the real estate transfer taxes. In many jurisdictions, the transfer taxes are based on a percentage of the contract price and are split equally between Buyer and Seller.

It is always good practice to request that the title company (or closing agent) furnish a preliminary HUD-1 a day or two before closing so that there are no surprise costs at the last minute. Make sure to review the preliminary HUD-1 with your attorney or real estate agent and bring it with you to settlement. You should compare this draft with the final HUD-1 to insure accuracy of all costs to Buyer and Seller.

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  1. That’s easily the most detailed breakdown of that document I’ve ever seen. Your post should be required reading home buyers. Odds are, most people sign and have no idea what all the numbers mean.

  2. Great post.
    Many buyers and sellers never see the HUD-1 form until the day of the closing. You can ask your attorney to fax you a HUD-1 form a day before the closing, when typically all of the information is filled in. If you’re not using an attorney, the title company ought to be able to get it for you. This is your opportunity to check what’s on the HUD-1 and make sure it’s correct.

  3. I recently went through the process of buying a new home and leading up to the closing day- requested a copy of the HUD-1 statement. Upon receiving it from my lawyer, I noticed a rather large ($6K+) discrepency from what I was estimating as needing to bring to the closing (in my favor). When I brought it to my lawyers attention, I was told that their numbers were accurate and that I was ‘over-analyzing’. I questioned again and sent an email stating that the numbers seemed off, but was told that their numbers were correct. Upon completing the closing- and receiving a check from my lawyer with the balance ($3K)- I went about settling into my new home. Two days after closing, I was told that the lawyer DID make a mistake and that their calculations on the HUD-1 statement were not correct, and that I my numbers were accurate. I do not believe we should be responsible for having to pay out the difference now that we have closed and signed off on the HUD. Any advice?

    Thank you.

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