That hour or so right before you get the keys to your new home are spent signing document after document with the Attorney. One of the most important documents you will sign at the closing table is the HUD 1 Settlement Statement (also known as a Closing Statement) is the document you sign that is the accounting of all of the charges associated with the purchase.
Most people in the mortgage industry just call it the “HUD” Which can be a little confusing for some borrowers, because they think we might be referring to a kind of loan you are getting, or a HUD home…
Unlike the Good Faith Estimate that you receive at application, the HUD1 is final so all the terms, costs, etc. will not change. We normally match the Good Faith Estimate,from the application with the final number on the HUD1. Because we have been doing this for so long, the “Accountings” are normally very close between our initial estimate, and the final numbers!
HUD 1 Definition
The HUD1 is a document required by RESPA (Real Estate Settlement and Procedures Act, the controlling Federal law) to show actual charges and adjustments for all parties including the seller, buyer, agents, lenders, and all third parties like attorneys and home inspectors.
Another name for the HUD1 is the Closing statement or Settlement statement.
HUD 1 Closing
A HUD1 is signed by the buyer, seller, and closing attorney at a closing of a home purchase. For a refinance, only the borrower and closing attorney sign the HUD1.
There is also a HUD 1 addendum, which compares the initial Good Faith Estimate with the Final numbers.
In the past, some originators could use the Good Faith Estimate as a selling vehicle. They would lower their costs and rates on the Good Faith Estimate in an effort to get borrowers to agree to do business with them. Some borrowers did not see the real charges until the final HUD1 at closing and by then it is too late…. This all changed when the Government required a comparison between the original Good Faith and the Final numbers and imposed a fine on the loan officer if there’s a significant difference! We applaud this change!
Always keep your HUD 1 closing statement from every mortgage you get. It is a controlling document and always good to keep for future transactions. We normally email them to our clients so that you have an electronic record.
If you are a First Time Homebuyer and want some one to help walk you through the process – give us a call! We love working with first time home buyers – and enjoy explaining all of the details of the transaction! Steve and Eleanor Thorne 919-649-5058 We have the BEST rates, and we do a TON of No Money Down, 100% loans!
I try and answer all questions :)