The HUD-1
The HUD-1 is the form commonly used to track all the various
costs related to a property purchase and sale transaction.
It itemizes all of your closing costs.
You have navigated through all the home buying obstacles and
are nearing the time for closing on your new property when
you start to wonder about your closing costs. Your broker
or attorney says that it will all be explained on "the HUD"!
What is the HUD?
HUD is the U.S. Department of Housing and Urban Development.
The HUD-1 is the form commonly used to track all the various
costs related to a property purchase and sale transaction.
The left side of the form (J. SUMMARY OF BORROWER'S TRANSACTION)
calculates the buyer's credits and debits; and the right side
(K. SUMMARY OF SELLER'S TRANSACTION) tracks credits and debits
for the seller. The top left side of the form shows amounts
due from the Buyer, and the bottom left side shows the amounts
paid for in behalf of the Buyer. The amount for the first
entry in these two slots is the same - item 101 and item 401.
Contract sales price.
It is the responsibility of your legal representative or the
title company (not commonly used on Martha's Vineyard) to
make sure the charges are entered correctly to either the
Borrower or Seller side of the form as per the Purchase and
Sale Agreement. You should be given a copy of the HUD prior
to closing to review, and you should be familiar with the
charges to ensure that the credits and debits are entered
into the correct columns on the HUD. Do you want to see what
the HUD looks like?
(Adobe Acrobat Reader document HUD-1
Form.PDF)
Since most purchases involve a mortgage, the postings that
follow items 800 - 905 on the Borrower side, will determine
the amounts connected with the loan. Line 202 on the bottom
left side of the HUD will show the loan amount. The total
amount the Buyer will ultimately write a check for can be
found on item 303.
Here are some of the charges that a buyer is going to face:
(Note: I have done my best to provide accurate fee charges;
however, there may be differences in some cases.)
- Attorney's fees can range anywhere from $600.00
to $10,000.00 all-inclusive.
- Land Bank Fee (2%) -- See my article "What
is The Land Bank?"
- Recording fees
• Declaration of Homestead = $35.00
• Declaration of Trust = $225.00 o Deed Stamps
= $4.56 / $1000.00
• Deed = $125.00
• Mortgage = $175.00
• Mortgage Foreclosure Deed & Affidavit =
$125.00
• Mortgage Discharge, Release or Partial Release
(recorded July 14, 2003
or thereafter) = $75.00
• Municipal Lien Certificate (MLC) = $65.00
• UCC (Uniform Commercial Code) Documents
= $45.00
• Federal Tax Liens (and related documents)
= $5.00
• Plans (per sheet) = $75.00
• Other documents (i.e. Trustee Cert, Easement)
= $75.00 / document
• Certified Copies (per page) = $1.00
- Earnest money deposit
- Tax adjustments
- Fuel, Water, Sewer adjustments
- Home Owner's Association fees
- Loan origination fee = 1% or 2% of the purchase
price or,
- Loan discount = 1% or 2% of purchase price
- Appraisal fee = +/- $450.00
- Application fee = +/- $350.00
- Credit report = +/- $85.00
- Inspection fees - if not P.O.C.
- Title Insurance - Owner's and Lender's
• Owner's = $3.50 / $1000.00
• Lender's = +$100.00 if it is a simultaneous
policy, otherwise $2.50 / $1000.00
- Survey = +/- $450.00
- Interest for the month
- Escrows for Hazard Insurance and Taxes
- Mortgage insurance premium
- Hazard insurance premium
The list goes on . . .
Some items may be marked "P.O.C.", which means
they are "paid outside of closing" and the buyer
or seller may pay these costs prior to settlement. Examples
are home inspections (Buyer), Title-5 wastewater system
inspection (Seller), credit report, appraisal, etc. Generally,
you can figure that closing costs will be about 4% to 6%
of the Purchase Price of the property. If you want to try
calculating an estimate on your own, try this Closing
Costs Calculator and here is another information source
HUD
Specific Settlement Costs By The Numbers
One last word of caution on the HUD-1 Form: Buyers look
at the settlement process as just the last step before they
own their new home. Take your time in looking over this
document. This document determines just how large the check
you write will be --- the one that gives you the keys to
your home. An incorrect accounting entry on the HUD-1 can
cost you thousands of dollars. Review each line and have
your legal representative explain any charges you do not
understand. Also, note your tax accountant may wish to see
your HUD before you file taxes in the year you purchase
your home.
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