Amy Fontinelle – Forbes Advisor
The US Department of Housing and Urban Development (HUD) has created a variety of standardized forms for use in certain mortgage transactions and HUD programs. One common HUD form is the HUD-1 settlement statement, which was previously used for a few types of mortgage products but is now used only for reverse mortgages.
If you’re wondering what a HUD-1 settlement statement is and what it means, here’s what you should know.
What Is a HUD-1 Form?
A HUD-1 form (also called a HUD-1 settlement statement) lists all of the costs you pay and credits you receive when you close on a loan, including how much the lender is charging you to issue your loan, how much you paid to have your home appraised and more. While this form was once used for mortgages applied for on or before Oct. 3, 2015, it’s now limited to reverse mortgage transactions.
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If you’re taking out a home equity conversion mortgage (HECM)—the most common type of reverse mortgage that’s backed by the Federal Housing Administration (FHA)—your HUD-1 will contain information on the home’s sale price, the real estate agent’s sales commission, any property taxes due and any earnest money you deposited. The form will also show how your final settlement expenses compare with the estimated costs your lender gave you on the good faith estimate (GFE) form when you applied for your reverse mortgage.
Note that for transactions that don’t include a seller (like mortgage refinancing), your lender might use a HUD-1A form instead. This is simply a shortened version of the HUD-1 that omits the sections related to selling costs.
What Does a HUD-1 Settlement Statement Look Like?
A HUD-1 settlement statement is a three-page form. Here’s what you’ll find on each page:
This page contains your personal information, property information and a detailed list of both the buyer’s and seller’s costs if real estate is changing hands.
This page includes the real estate broker’s fees (if applicable) and a detailed list of all your closing costs. While it’s rare to see a HUD-1 form in a purchase-and-sale transaction, here are some of the loan fees that the form might cover, broken down by section.
- Section 800: Here, you’ll see the lender’s origination fee and any discount points you agreed to pay to get a lower interest rate. You’ll also see several third-party fees for your home appraisal, credit report, flood certification and tax service. These fees cover the professional opinion of your home’s value as well as the lender’s review of your credit reports and scores.
- Section 900: You’ll owe some amount of interest on your loan to cover the day you close through the end of the month. The “daily interest charges” line shows the daily cost and total cost you’ll owe your lender. The next line is for mortgage insurance premiums, which anyone who takes out a federally insured reverse mortgage has to pay. The third line in this section is for any homeowners insurance premiums you have to pay at closing.
- Section 1000: In a traditional purchase transaction where you put down less than 20% of the home’s purchase price and the lender requires you to maintain an escrow account, this section shows how much you have to fund that account upfront. With a reverse mortgage, instead of paying for these items out of pocket, the money might be withheld from your loan proceeds. This section shows how much would be withheld each month for homeowners insurance, mortgage insurance premiums and property taxes.
- Section 1100: You’ll have to pay for your lender’s title insurance policy, and it could be a good idea to purchase an optional owner’s policy as well. This section details those costs, which protect your lender (and you, if you buy an owner’s policy) if someone tries to come along later and claim they have a legal interest in your home.
- Section 1200: The government records property transactions so people can assert their property rights, but this service comes with a fee. Section 1200 shows how much you have to pay to create an official record stating that your lender is taking an interest in your home and that you’re the owner.
This page includes a summary of how the GFE form compares to the closing costs your lender is asking you to pay to finalize the loan as well as key details about your loan terms.
- Comparison of GFE and HUD-1 Charges: Having a good understanding of the charges listed on page 2 will help you more easily understand this comparison section. It’s also a good idea to pull up your copy of the GFE form that you received to make sure the numbers match. Keep in mind that there might be some changes between the dollar amounts on your GFE form and HUD-1—but only certain items can change, and they can’t vary by more than 10%.
- Loan Terms: This section covers what you’re legally agreeing to, such as how much you’re borrowing, your repayment term, interest rate, whether your rate could change and if the loan has certain features (like negative amortization or a balloon payment). You’ll also see itemized monthly costs if your lender is paying your property taxes, homeowners insurance or flood insurance premiums on your behalf from money it’ll take out of your home equity.
Frequently Asked Questions (FAQs)
When Should I Receive the HUD-1 Settlement Statement?
The law requires your lender to give you the HUD-1 settlement statement no later than the business day before your loan closes—but only if you request it. If you don’t, the first time you see the form might be when you sign your closing documents.
You also have the option to waive your right to see the settlement statement at closing and can instead have it delivered or mailed to you as soon as possible after the transaction settles. However, this probably isn’t a good idea. Instead, make sure to review what you’re being charged while you still have a chance to ask questions and resolve disputes before your loan closes—and while your lender still has an incentive to keep your business.
Also note that your lender doesn’t have to show you the HUD-1 at or before closing if you don’t attend the settlement—so be sure not to skip it if you want to review all of your closing costs before you pay them .
Where Can I Find My HUD-1 Settlement Statement?
If your loan hasn’t closed yet, you can get your HUD-1 from your lender. If you’ve already closed, you should be able to find your HUD-1 settlement statement with your closing documents.
Is a HUD-1 Settlement Statement the Same as a Closing Statement?
A HUD-1 is a type of closing statement. However, outside of reverse mortgages and mortgages closed on or before Oct. 3, 2015, most real estate transactions now use a closing form called the closing disclosure that you’ll receive instead.