How to Read a HUD Statement
- 1. Look at the first page of the HUD statement. ...
- 2. Move on to the next page, which gives a detailed listing of each charge included in the summary on page one. ...
- 3. Compare the actual costs with the good-faith estimates found on page three. ...
- 4. Review the loan-terms section at the bottom of page three. ...
Full Answer
How to properly record a HUD settlement?
- Deposit made by the buyer
- The loan amounts
- The amount owed by the seller to the buying party is a credit entry and must record. ...
- Property tax and assessment pro-ration credits from seller to the buyer of the HUD Settlement Statement
- Lastly, any additional credits to the buyer will be entered here from any source, if not from the seller
What does a HUD statement look like?
What does a HUD-1 look like? The statement is divided into two columns. The left lists all charges to the borrower and the right all those to the seller. The breakdown of the pages is as follows: Page One
What is form HUD 1?
A HUD-1 form, also called a HUD-1 Settlement Statement, is a standardized mortgage lending document. Creditors or their closing agents use this form to create an itemized list of all charges and credits to the buyer and to the seller in a consumer credit mortgage transaction.
What is a HUD settlement?
The HUD-1 Settlement Statement is a standard government real estate form that was once used by settlement agents, also called closing agents, to itemize all charges imposed upon a borrower and seller for a real estate transaction. The statement is no longer used, with one exception—reverse mortgages.
How do you read a HUD settlement statement?
Look at the first page of the HUD statement. Look over the basic details in Part B, such as your name, the seller's name and the property address. Read sections J and K, which give a summary of the total amounts owed from or due to the borrower or seller.
What are some of the transactions recorded on the HUD-1 Settlement Statement?
The HUD-1 Settlement Statement is a document that lists all charges and credits to the buyer and to the seller in a real estate settlement, or all the charges in a mortgage refinance.
Is a settlement statement the same as a HUD-1?
What Is a HUD-1 Form? A HUD-1 form, also called a HUD-1 Settlement Statement, is a standardized mortgage lending document. Creditors or their closing agents use this form to create an itemized list of all charges and credits to the buyer and to the seller in a consumer credit mortgage transaction.
Are HUD-1 Settlement Statements still used?
The HUD-1 Settlement Statement is a standard government real estate form that was once used by settlement agents, also called "closing agents," to itemize all charges imposed upon a borrower and seller for a real estate transaction. The statement is no longer used, with one exception: reverse mortgages.
How do you read a closing statement?
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What does POC on a settlement statement mean?
Amounts paid to and by the settlement agent are shown. Items marked “(p.o.c.)” were paid outside the closing; they are shown here for informational purposes and are not included in the totals.
What is the HUD-1 now called?
Closing DisclosureThe Current Closing Disclosure The Consumer Financial Protection Bureau (CFPB) took over administration from HUD and replaced the HUD-1 with the Closing Disclosure in October of 2015.
What replaced the HUD-1 Settlement?
The Closing Disclosure combines and replaces the HUD-1 Settlement Statement and the final Truth-in-Lending (TIL) statement. The form mirrors the information provided on the Loan Estimate.
What is the primary purpose of the settlement statement?
A settlement statement provides a breakdown of all the closing costs and credits involved in a real estate transaction or refinance.
Is closing statement and HUD the same?
The HUD-1 form, often also referred to as a “Settlement Statement”, a “Closing Statement”, “Settlement Sheet”, combination of the terms or even just “HUD” is a document used when a borrower is lent funds to purchase real estate.
What is the difference between a closing disclosure and a settlement statement?
While closing disclosures provide information about a borrower's loan, settlement statements do not include loan information. Settlement statements are used for commercial transactions and cash closings.
Is a settlement statement the same as a closing statement?
A settlement statement is a document listing the terms and conditions of a settlement agreement and details all related costs or credits due to each party. A mortgage loan settlement statement is commonly known as a closing statement.
What is a HUD-1 settlement statement?
A HUD-1 settlement statement, also referred to simply as a settlement statement , details every charge associated with your new loan. It also outlines who is responsible for each of those charges — the buyer or the seller — as well as any credits you may receive for things like taxes, insurance or deposits.
What is the first page of a HUD settlement statement?
The first page of the settlement statement has a transaction overview, including the amount of cash you need to bring to closing. The sections below are highlighted so you can have an idea of what they look like on the HUD-1 settlement statement you’ll receive.
How long do you have to give a closing disclosure?
In contrast, lenders must give you a closing disclosure three days before closing. Everyone taking out a HELOC, reverse mortgage or manufactured home loan should ask their lender for the HUD-1 document at least a day before closing to allow time to review the contents, fix errors and raise questions with the lender.
What is section 300?
No. 5 (Section 300): Cash at settlement from/to borrower. This section explains if you need to bring cash to the settlement. In most cases, the closing costs for a reverse mortgage refinance or HELOC will be subtracted from the loan, so you don’t need to bring funds to the closing.
What is a HELOC loan?
A HELOC is a mortgage-based line of credit that works much like a credit card. It allows you to pull from your home’s existing equity (or the value of the home that you own, compared to what you still owe to your lender) on a revolving basis.
How long does it take to pay down a HELOC?
You can borrow as much as you need up to your maximum loan amount, then pay it down to zero as many times as necessary during a set draw period that usually ends after 10 years.
How long does a HELOC loan last?
This revolving product has a set draw period that usually ends after 10 years. After the draw period is over, you pay the remaining balance in fixed payments until it is paid in full.
What Does the HUD-1 Show?
The HUD-1 is a multi-part form, divided into sections by topic, as described below. It's also divided into the buyer's side and the seller's side. The buyer is referred to as the "borrower" on the form because the HUD-1 was created to explain closings involving lender financing. However, the HUD-1 is sometimes used in cash-only deals when closed by a title insurance company or separate escrow company.
What is on the top of the HUD-1?
The top of the first page of the HUD-1 shows information about the parties, the mortgage, and the closing.
What lines are real estate taxes billed on?
Real property taxes and assessments that are proportionally divided between the borrower and seller as of the closing date are shown on lines 210 through 212 on the borrower's side, and lines 510 through 512 on the sellers side. General real property taxes due, but not yet billed and payable, are credited to the borrower in lines 210 and 211, and debited to the seller in the corresponding 500 series lines.
What line is the face amount of a first purchase money loan?
The face amount of the first purchase money loan is shown on line 202. The amount of a seller's loan assumed by the borrower is shown on line 203. Second purchase money mortgages, or home equity loans that are subordinate to the first purchase money loan, are shown on lines 205 through 209. In states where the seller pays for the owner's title insurance policy, the borrower's credit for the premium for the owner's title insurance policy is shown on line 204, and debited to the seller on Line 507.
What lines are reimbursed for flood insurance?
These reimbursements are shown in lines 106 through 112. Credits that reduce the dollar amount you must bring to the closing are shown in the 200 series.
What line is earnest money on a mortgage?
Credits that reduce the dollar amount you must bring to the closing are shown in the 200 series. The borrower's earnest money credit appears in line 201, with the corresponding seller's debit for earnest money on either line 501 or Line 506. The latter depends on whether it's being brought to closing (find it on line 501), or all or part of the earnest money is being held by a broker as payment of commissions (find it on line 506).
Can you use HUD-1 to confirm closing charges?
As mentioned, you can use the HUD-1 to confirm that the actual loan and closing charges haven't jumped from the estimated charges you were shown on the Good Faith Estimate (GFE). To make this task easier, the law requires the escrowee to reference line items on the GFE within the corresponding line items on the HUD-1.
What is the HUD-1 statement?
Using the HUD-1 statement to reconcile what your mortgage loan broker promised on your Good Faith Estimate will give you an accurate picture of your loans actual fees and closing costs. Here are tips to help you make sense of this important mortgage document.
How to find broker rebate on HUD?
Once you have the HUD-1 statement from your lender you’ll find that it closely resembles the Good Faith Estimate you received. If Yield Spread Premium you will find it around lines 810 or 811. If these lines are blank you’ll have no broker rebate…that’s exactly what you want to find on the HUD-1 statement. If you find a “Broker Rebate” with a number next to it you’ve got Yield Spread Premium, and yes that large number is in dollars. This is your mortgage broker’s cash compensation for overcharging you. In most cases this is being paid in addition to the origination fee you’re already paying for the broker’s services (and are probably overpaying).
What is YSP mortgage?
Yield Spread Premium or YSP for short is the “rebate” your mortgage broker receives from the wholesale lender for charging you an above market mortgage rate. This markup of the wholesale mortgage rate that your lender approved you is what makes mortgage interest rates retail by nature. Online Mortgage lenders encourage this overcharging with the discount broker rebate because they make the majority of their profits selling loans with above market rates to investors on the secondary market. The problem with this “broker’s rebate” is that it is rarely disclosed and could raise your lowest mortgage payment by hundreds of dollars every month. Question the average mortgage broker about Yield Spread Premium and you’ll have a defensive and often angry person on your hands.
How to find yield spread premium?
The first opportunity you’ll have during the mortgage process to spot the infamous broker rebate is on your wholesale lender’s rate lock confirmation. Once you’ve agreed to lock in your mortgage rate if you’re dealing with an honest mortgage broker you will receive written confirmation FROM THE LENDER. Shady mortgage brokers will try and pass off written confirmation typed up on their own letterhead. If you get rate lock confirmation like this from your mortgage company or broker, you have not locked in your mortgage rate. Unless you have written confirmation FROM THE LENDER you could be a victim of a bait-and-switch scam when the loan you were promised falls through because your mortgage broker did not properly lock in your mortgage rate.
What is a POC on HUD?
The broker rebate or Yield Spread Premium is frequently referred to as POC charges, meaning Paid Outside of Closing. This is simply legal speak for Yield Spread Premium…don’t be fooled.
What is a good faith estimate?
Your Good Faith Estimate is just an estimate. The law requires that your get this document after submitting your application; however, it does not require that it accurately reflect the fees associated with any mortgage offer. After all the Good Faith Estimate is only an estimate and mortgage brokers frequently low ball closing costs and leave their markup of your lowest mortgage rate off this document completely.
Why do homeowners get ripped off on their first mortgage?
Most homeowners get ripped off on their first few mortgages because they just don’t know better. You can prevent your mortgage broker and lender from ripping you off and save thousands of dollars per year on your next mortgage by doing your homework and learning how to negotiate for wholesale mortgage rates.
What is a HUD-1?
The HUD-1 is the financial picture of the real estate closing. It shows all of the money transfers between the buyer and seller, as well as the closing costs, including the escrow and title fees and the costs of the buyer’s loan, if applicable. The HUD-1 is a standardized form that the title company prepares for the closing, as required for all closings involving a federally insured lender under the Real Estate Settlement Procedures Act (“RESPA”). It is important to save your HUD-1 for your tax preparer. You will need it in the year of the purchase, as well as the year the property is sold. The HUD-1 form itself was created by the U.S. Department of Housing and Urban Development (“HUD”) and is updated periodically.
What is section L in a settlement?
Section L contains a long list of settlement charges. Charges shown in the left column are to be paid by the buyer, and charges shown in the right column must be paid by the seller. The settlement charges are grouped into the following line series:
What is a settlement statement?
A settlement statement is an itemized list of fees and credits summarizing the finances of an entire real estate transaction. It serves as a record showing how all the money has changed hands line by line.
Who is responsible for preparing the settlement statement?
Whoever is facilitating the closing — whether it be a title company, escrow firm, or real estate attorney — will be responsible for preparing the settlement statement.
Is a settlement statement the same as a closing statement?
Yes, a settlement statement is the same as a closing statement, though “settlement” is the formal term most likely to be used by the real estate industry.
What is an ‘excess deposit’ at closing?
A particular line item that causes confusion on the seller’s settlement statement is the “Excess Deposit.” What is an excess deposit, and who will receive the funds listed on that line?
What does an impound account do at closing?
At closing the buyer sets up an impound account that allows them to bundle the cost of their mortgage principal, taxes, mortgage insurance, and other monthly costs into one payment. The lender likes this because they can make sure the new owner will keep up to date with all the payments associated with the home.
What information is needed to complete a closing document?
At the top of the document (before you get to the portion that looks like a spreadsheet) you’ll see a few boxes for inputting information that records basic details about the transaction, such as the names of the buyer and seller, the property address, and the closing date.
What is a seller's net sheet?
The seller’s net sheet is not an official document but an organizational worksheet that your agent will fill out to estimate how much you’ll pocket from your home sale after factoring in expenses like taxes , your real estate agent’s commission, your remaining mortgage, and escrow fees.
What is HUD-1 Settlement Statement?
The HUD-1 Settlement Statement is a document that lists all charges and credits to the buyer and to the seller in a real estate settlement, or all the charges in a mortgage refinance. If you applied for a mortgage on or before October 3, 2015, or if you are applying for a reverse mortgage, you receive a HUD-1.
What form do you use for a refinance loan?
In transactions that do not include a seller, such as a refinance loan, the settlement agent may use the shortened HUD-1A form.
What is a HUD-1?
The HUD-1 is a settlement statement and full of helpful and important information. HUD-1s may be simple and contain small amounts of information, while others may be complicated and jammed pack with data. When buying investment property (buy-and-hold), all HUD-1s have one thing in common, and that is the tax treatment of each line item.
What is the 804. appraisal fee?
804. Appraisal Fee: If required to obtain a loan, the cost is amortized over the life of the loan. If an appraisal is not required, the cost is added to the basis of the property and depreciated over the life of the property.
What is 102 in real estate?
102. Personal Property: The price of any personal property included in the sale. This must be depreciated.
When are loan points deductible?
This is an area for confusion, as loan points are deductible as a current expense when paid in connection with a primary residence.
Is a 1001 escrow account deductible?
1001. Initial Deposit for Your Escrow Account: This amount will be deductible as a current expense when the funds are disbursed from your escrow account by the lender.
Is assessment a current expense?
108. Assessments: Deductible as a current expense but only the portion greater than the value found on line 212. If, however, the assessment is specifically labeled as a local improvement district, they must be amortized over the life of the loan.
Is 1002-1004 a current expense?
1002-1004 are deposited with your lender and will be deductible as a current expense when the funds are disbursed from your escrow account by the lender.
