Q:

How do you understand settlement forms?

A:

Quick Answer

An HUD-1 Settlement Statement is a form that that shows where the borrower's money is spent for purchasing or refinancing real estate. It itemizes the monetary fees, charges and exchanges between a borrower and a lender including escrow, title fees and costs of the loan. Among the most important items in an HUD-1 Settlement Statement form are the price, address, down payment, tax proration title insurance and homeowners insurance, states BiggerPockets.com

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Full Answer

The HUD-1 Settlement Statement form shows where the borrower's money is spent for the purchase of the property. The Real Estate Settlement Procedures Act requires all federally insured lenders to complete an HUD-1 Settlement Statement form at the closing and provide the borrower with a copy of the form.

Borrowers need the HUD-1 Settlement Statement form for tax purposes and the year they choose to sell the property. Perhaps most importantly, borrowers can compare the HUD-1 Settlement Statement form with the Good Faith Estimate form that their lenders provided them when they applied for the loan. This is to ensure that they were not overcharged for the loan, notes Nolo.com.

Borrowers should double-check the following items on their HUD-1 Settlement Statement form for accuracy to see if the loan was appropriated properly, notes BiggerPockets.com:

  • Price
  • Address
  • Down payment
  • Tax proration
  • Title insurance
  • Title insurance coverage amount
  • Homeowner's insurance
  • Appraisal fee
  • Intangible taxes
  • Payoff
  • Prepaid interest
  • Commission
  • Earnest money
  • HOA
  • Cash to/from borrower to seller
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