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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
What Is a HUD-1 Form?
A standardized mortgage lending document is called a HUD-1 form, and sometimes also as a HUD-1 Settlement Statement.
This form is used to create an itemized list of all charges and credits to the buyer and to the seller in a consumer credit mortgage transaction by the creditors and their closing agents.
Mostly a HUD-1 form is used for reverse mortgages and mortgage refinance transactions.
For most real estate transactions, the closing disclosure form replaced the HUD-1 form on October 3, 2015.
But, you would have received a HUD-1 if you applied for a mortgage on or before October 3, 2015. With transactions where the seller is not included, like a refinance loan, the settlement agent may use the shortened HUD-1A form.
Nowadays, borrowers receive a form called the Closing Disclosure for most kinds of mortgage loans, instead of a HUD-1 form. In order to prevent errors or any unplanned expenses, the form must be reviewed by the borrower before closing.
Hud-1 Form Explained
All costs related to closing the transaction are listed in the HUD-1 form. In the case of reverse mortgage and mortgage refinance transactions, the Federal law requires a form to be used as a standard real estate settlement form.
The law also requires that at least one day prior to settlement the borrowers be given a copy of the HUD-1, though any changes in the form of figures can be added, corrected, or updated up to the time the parties are seated at the closing table.
The form can be reviewed by the buyers and sellers with a real estate agent, attorney, or settlement agents. even if there is no loan involved, in the HUD-1 form, buyers are referred to as “borrowers.”
Did You Know?
The HUD-1 form is meant to be reviewed on the reverse side, first!
On the reverse side, there are two columns: The borrower’s charges are itemized on the left-hand side column and the seller’s charges are itemized on the right-hand side column.
Charges related to the mortgage, such as a loan origination fee, discount points, payment for a credit report, and fees for the appraisal and flood certification are included in the borrower’s list.
The list may also include any prepaid interest charges, homeowner’s insurance fees, property taxes, owner’s and lender’s title insurance, and the closing agent’s fees.
The real estate commission, any contractually agreed-upon credit to the buyer, and mortgage pay-off information are mentioned in the itemized seller list. The buyer’s itemized charges are typically higher than the seller’s itemized charges.
The figures are added up on the back page of HUD-1 verso, and the total shows on the front side (recto) of the form.
At the bottom of the front page of the form, the amount of cash required to be paid by the borrower and the amount to be paid to the seller appears.
Where to Get a Copy of the HUD-1 Form from?
The bank, the Title Company, which is the settlement company, and the real estate agent, may have copies of the HUD 1 form. The easiest one to contact in the bank – if you had a mortgage and are still making payments to them.
Is a HUD-1 Form Required?
Unless its use is specifically exempted by the Federal regulations, the HUD-1 form must be used for all mortgage transactions that are subject to the Real Estate Settlement Procedures Act.
Only items related to the seller’s transaction may be omitted from the HUD-1.
Conclusion
The HUD-1 form is a document in a real estate settlement that lists all charges and credits to the buyer and to the seller, or it lists all the charges in a mortgage refinance.
