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    The HUD-1 Settlement

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    The HUD-1 Settlement Statement is used by conventional and government insured lenders in the US. Explain the content and the purpose for each section and line for both buyers and sellers.

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    The HUD-1 Settlement Statement is used by conventional and government insured lenders in the US. It is not as universal when there is no loan involved. The statement provides a detailed summary of the transaction for both the seller and the buyer.

    Page 1 is the summary for the transaction.
    Page 2 provides a breakdown for combined amounts on page 1
    Page 3 gives a comparison of the Good Faith Estimate to the actually HUD-1 statement

    The left side of page 1 is used for buyers/borrows, and the right side is for sellers. Section B provides pertinent details about the transaction including a description of the buyers, sellers, the property location and the settlement date.

    Page 1

    Section J: Summary of borrower's transaction

    Line 101 and 102 represent the agreed upon prices.
    Line 103 is the total costs and advance payments required to fund a loan as detailed on page 2
    Lines 106, 107 and 108 are necessary to adjust taxes and assessments to the actual day of closing. For example, a borrower may be required to reimburse a seller if the seller has paid real estate taxes for periods beyond the closing date.
    Line 200 begins the reductions from the purchase price.
    Line 201 will disclose any deposits or credits allowed to the buyer.
    Line 202 shows the actual amount of the new loan.
    Line 203 is rarely used because most loans are not assumable and therefore must be paid in full by the seller before the transaction can be completed.
    Line 210, 211 and 212 are the reverse of lines 106, 107 and 108. When the seller has not paid his share of taxes and assessments, the buyer is required to do so. However, the buyer will receive credit for amounts advanced on behalf of the seller.
    Line 303 is the net cash amount due to or from the buyer to close the transaction.

    Section K: Summary of seller's transaction

    Lines 401-405 should agree to the buyer's column
    Lines 406-408 will agree to lines 106-108 on the buyer's side.
    Line 500 begins the reductions from the price and will match the borrower's column.
    Lines 504-509 list any loans or liens against the property that must be cleared in order for the buyer to have clear title. The blank lines could ...

    Solution Summary

    The solution is a practical guide to understanding real estate closing with good explanations of the types of transactions and the meaning of the charges in a purchase or sale of real estate.