Chapter 13 - The HUD-1

The HUD-1 is the settlement statement that is provided at the closing. It is also referred to as a RESPA or a closing statement, depending on what region of the country in which you live. This is a pretty standard form that lists all of the fees, tax prorations, escrows, earnest money and just about every fee that is related to the purchase of the property.

There is a sellerfs side to this statement and a buyerfs side. Both sides must balance. The buyer has debits and credits and the so does the seller. As a buyer, you will have the purchase price of the home and settlement and mortgage charges as your debits. If you live in a state where taxes are paid in arrears, you will have a tax proration for a credit as well as be credited with the amount of the mortgage and earnest money.

Settlement charges will include the fee to close the property, which is also called the escrow fee. This is generally paid for by the buyer. In most states, the seller pays all transfer tax stamps for the state, county and, if applicable, the municipality. In some states, the seller and buyer split this fee. This would be included in the settlement statement.

You should not have to pay more than $150 for the escrow closing. You can negotiate this with the seller, too. You can ask in your contract that the seller pay any and all fees related to closing.

Also included in the settlement charges will be the fee for the lenderfs title policy. This can be a few hundred dollars and is determined by the price of the home. This is buyerfs cost because you are the one who is choosing to get a mortgage.

Mortgage fees can add up. You will have the application fee, points (if any) and miscellaneous document preparation fees. THESE ARE NEGOTIABLE. This cannot be stressed enough. Lenders are cutting each otherfs throats to write mortgages. Negotiate the fees.

Lenders can fee you to death - especially if you are going to a secondary mortgage house. You will be paying an underwriting fee, document fees, application fees, credit check fees, etc. Tell the lender that you want to know the fees upfront. This way, you are not surprised when you get to the closing table and see how much money you are paying in fees.

The lender will probably also escrow for your taxes and insurance. They usually take 6 months worth of taxes to put in escrow as they will be paying your real estate taxes. They also take one yearfs worth of homeownerfs insurance premium. This will sit in an escrow account from which the payments will be made. This is not mandatory that you have the lender escrow for taxes and insurance. If you have 20 percent equity in the home, you can pay this yourself.

The HUD-1 will be presented to you at the closing. It will actually be prepared prior to the closing by the title company. The escrow officer will give you a copy of the HUD-1 for your file. You have a right to question anything on this statement, but will have to sign the statement before the funds are disbursed.