HUD-1 Settlement Statement - What's In Page Three
Make sure you understand the HUD-1 settlement statement before closing on a home. Use this quick guide to learn what's covered on page three of the HUD-1.
Page three of the HUD-1 Settlement Statement is broken into two sections. The first of a side by side comparison of the Good Faith Estimate (GFE) charges to the actual charges listed on the second page of the HUD-1. These are broken down further into the 3 different types of fees listed in the GFE; charges that cannot change, charges that cannot increase more than 10% and charges that can change.
Below that the loan terms are listed in detail. This page is not itemized by line like the two prior pages, nor does it contain the two columns for borrower and seller charges.
Comparison of Good Faith Estimate (GFE) and HUD-1 Charges
The first section listed is the Charges That Cannot Increase. To the left each item is specified as well as it's corresponding HUD-1 line number. Items included in this section are the origination charge (#801), the borrower's credit or charge for a specified interest rate (*802), the adjusted origination amount (*803) and transfer taxes (#1203). To the right there is a column for the GFE totals and beside that is a column for the HUD-1 totals.
Next is a section for the Charges That in Total Cannot Increase More Than 10%. This section is laid out exactly the same as the previous section and includes the government recording charges (#1201). In addition there is a line beneath the total columns that specifies the increase between the GFE and the HUD-1 charges so you can easily compare the two.
The next section is the Charges That Can Change, laid out exactly like the charges that cannot increase section. Items included in this section are the initial deposit for the escrow account (#1001), daily interest charges (#901) and homeowner's insurance (#903).
Loan Terms
This last section of the HUD-1 settlement statement specifies the terms of the loan. The items listed in this section include:
Initial loan amount.
Loan term in years.
Initial monthly payment amount and whether it includes principle, interest and mortgage insurance.
Information regarding whether or not the interest rate can rise and if so the maximum percentage it can rise to, when the first possible interest change will be, how often it can change and by how much it can increase or decrease each time. It also lists a guarantee that for the life of the loan the interest rate will never be lower or higher than a specified percentage.
Information regarding whether or not the loan balance can rise and if so the maximum that it can rise to.
Information regarding whether or not the monthly payment can rise and if so when the first increase would occur, how much it would rise and the maximum amount that the monthly payment can ever reach.
Information regarding whether or not there is a prepayment penalty and if the amount of the maximum prepayment penalty.
Information regarding whether or not the loan has a balloon payment and if so the amount of the balloon payment and when it is due.
Information regarding the total monthly amount - whether there is a monthly escrow payment, if so how much it is in addition to principle, interest and mortgage insurance and what all is included in the additional monthly escrow amount.
Once You've Reviewed the HUD-1 Settlement Statement
As soon as you receive the HUD-1 you should review it to ensure there are no errors or surprises. You do not have to sign the statement, but it's a good idea to bring it with you to the close to make sure the totals listed on the HUD-1 statement are in fact what is on the settlement documents you will sign at close.
If you do notice an error or have any questions contact your agent, lender and escrow officer as soon as possible and certainly ask before you sign any documents.
Learn what's on page 2 of the HUD-1 Settlement Statement