The Settlement Statement

A Brief Explanation:

The HUD-1 Settlement Statement is a uniform document developed by the U.S. Department of Housing and Urban Development (HUD). Almost all real estate transactions utilize this form to provide a clear and concise accounting of all settlement charges and adjustments. The HUD-1 will summarize the financial transaction between the Buyer and the Seller, as well as lender, title and governmental fees in a purchase or just the borrower's lender, title, and governmental fees in a refinance.

What It Consists Of:

Since most of the specific costs related to the transaction are derived from the calculations on page two (section L) of the settlement statement, one should examine these charges first. Here, you will find seven major categories of charges:

• Sales/Broker's commission
• Items payable in connection with the loan
• Items required by lender to be paid in advance
• Reserves deposited with lender
• Title charges
• Government recording and transfer charges
• Additional settlement charges.

Each of these major categories is divided into sub-categories. The actual cost charged to you will greatly depend on what has been negotiated with the various parties involved and the requirements of the lender. The total of all settlement charges on this page are carried forward to page one.

Page one starts with information (Sections A through I) concerning the loan and parties to the settlement. Sections J and K contain a summary of all funds transferred between the Buyer(s), Seller(s), Lender(s), and providers of settlement services. The bottom line in each column shows the net cash to be paid or received by the borrower and/or seller.