Tips for Understanding Details of the HUD-1 Settlement Statement

a real estate agent meeting with a young couple going over a HUD-1 settlement statement.

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As a real estate agent or broker, it's imperative that you understand the HUD-1 Settlement Statement thoroughly. It's not so that you can do the math for the client, but at least you need to be able to explain how it was done, or where these numbers come from.

Since the housing and mortgage crash and the passage of new mortgage lending rules and regulations, the line items here have moved around. Some items are gone while others are worded differently. There are more requirements for Mortgage Disclosures and Good Faith Estimates, and changes aren't over yet.

Instructions for Understanding Each Page of the HUD-1 Settlement Statement

The easiest and most visual way to use this tutorial will be to view the interactive, or fillable, PDF document which is also included at the end of this article. Versions of it online have live links to the tutorial items, which are also shown below. The learning process should be easier that way.

Page 1 of the HUD-1

  • Section B
  • Sections C through I
  • 100. Gross Amount Due from Borrower - This is the amount of the money the buyer must bring to the closing table. This is the balance after the lender's contribution, the mortgage amount, and any other money contributed by others on behalf of the buyer. Where legal, this could be a rebate of part of the buyer agent commission.
  • 200. Amounts Paid by or In Behalf of Borrower - As previously mentioned, the lender's mortgage amount is presented via wire or check on behalf of the borrower. There can be other amounts from other sources that legally can be provided on behalf of the buyer.
  • 300. Cash at Settlement From/To Borrower - Depending on charges and previous money contributed by the buyer, as well as any cash concessions from the seller, this could be an amount of money to go to the buyer at closing.
  • 400. Gross Amount Due to Seller - After all of the common closing cost items and other deductions, this is the amount that is due to be distributed by check to the seller at closing.
  • 500. Reduction in Amount Due to Seller - Certain amounts may be legally withdrawn or withheld from the seller, and they would be reflected here.
  • 600. Cash at Settlement To/From Seller

Page 2 of the HUD-1

  • 700. Total Sales/Broker Commissions - The total commissions paid to both real estate brokerages involved will be entered here. There may be withholding from this, such as in states like New Mexico where gross receipts sales taxes are charged on commissions.
  • 801. The Loan Origination Fee - This is the fee charged by the lender for originating the loan, normally in points, each 1% of the loan amount. A one point origination fee on a $200,000 mortgage would be $2,000.
  • 802. Loan Discount Fee
  • 803. Appraisal Fee - Amount charged by the lender for ordering and paying the appraiser to value the property.
  • 804---The rest of the loan fees - There is always a laundry list of fees charged in relation to the mortgage, and they're going to be shown here. It is surprising to many buyers just how much of their closing costs are totally wrapped up in getting the mortgage.
  • 901. Mortgage Interest Calculation - There is a quoted mortgage interest rate and an APR, Annual Percentage Rate. This is where the rate is applied to the mortgage amount to show interest to be paid.
  • 902---The rest of the 900 section
  • 1000. Reserves Deposited with Lender
  • The Aggregate Acct. Adj Line
  • 1100. Title Charges - There can be the attorney, title company fees, abstract fees, title and deed preparation, and other fees as a part of these charges.
  • 1200. Government Recording and Transfer Charges - Some states have real estate transfer fees or taxes, and those will be shown here if applicable.
  • 1300 & 1400. Additional and Total Settlement Charges

A sample of the HUD-1 form appears in the box below, which you can also download and fill out later.

Sample HUD-1 Form