One of the key documents is the HUD-1, (http://www.hud.gov/offices/adm/hudclips/forms/files/1.pdf ) a government-mandated statement that breaks down the costs of the transaction.

Depending on the city or county, buyers and sellers, borrower’s might receive more than one HUD-1 before closing so they can track new information and changes as the loan progresses. The final HUD-1 will be issued at closing or in your closing package.

                      ********************************************************************

• Basic information

Sections B through I of the settlement statement describe the transaction’s parameters, including the name and address of the buyer, seller and lender; the property address; the name of the settlement company; and the closing date.  As a borrower, you should pay attention to the loan type you are obtaining.

• Summaries of borrower’s and seller’s transactions

Section J summarizes the buyer’s or borrower’s costs. The figures in fields 100 to 120 are sums due from the buyer or borrower, with line 120 being the total. The figures in fields 200 to 220 are amounts credited to the buyer or borrower, with line 220 being the total. Figures in fields 300 to 303 pull the totals from line 120 and 220 to calculate line 303, the total amount due to or from the buyer or borrower at closing.

Section K shows sums due to the seller, reductions in the amount due to the seller and the total amount due to or from the seller, just as Section J does for the buyer or borrower.

• Settlement charges

This section is on Page 2 and lists the following:

–  Real-estate brokerage fees

–  Lender fees

–  Prepaid charges, such as interest and mortgage insurance

–  Escrow or impound deposits

–  Title-insurance fees

–  Government recording fees and transfer taxes

–  Other settlement charges, such as a home inspection, survey or pest-control report.

• Comparison of Good Faith Estimate and HUD-1 charges

Page 3, is the most important page for borrowers. The first column in the top three sections recaps the Good Faith Estimate, which discloses the or borrower’s loan charges. The second column recaps the HUD-1 charges, allowing a line-by-line comparison of the estimates to the actual costs.

The total, shown at the bottom of the second chart as a dollar amount and percentage, discloses the difference between the GFE and HUD-1 with respect to costs that can’t increase or can’t increase by more than 10%. If the lender miscalculated or didn’t properly disclose these charges, the buyer or borrower must receive a refund for the overage from the lender, usually shown as a credit on the HUD-1.

• Loan terms

The final section recaps the terms of the loan for the borrower, including the initial loan amount, interest rate, monthly payment of principal, interest and mortgage insurance, if any. The questions and check boxes disclose whether the rate can rise, whether the loan balance or payment can increase and whether the loan has a prepayment penalty or balloon payment. Other details should be included if any “yes” boxes are checked.

Have a question on what your HUD may look like?  – Call me today @ 239-415-6574 or visit our website at www.title-junction.com