The matters of housing and real estate distribution are crucial, and hence, specific terminologies and statements are built to carry out all tasks efficiently. One such settlement statement or a term that you will often come across in the housing business or legal matters is HUD-1. The U.S. Department of Housing and Urban Development (HUD) has created standardized forms for mortgage transactions and HUD programs.
The HUD-1 Form is a part of this same category. If you heard about this settlement statement form and wanted to learn more, then lucky for you, you have landed on the right page. Hop on below to know what is a HUD-1 Form and all the other related information.
HUD-1 Form – What Does it Mean?
HUD-1 Form – also known as HUD-1 settlement statement or closing sheet, is a standardized form used during real estate transactions. This mortgage lending document is used by creditors or closing agents to list all paid costs and the costs received when you close a loan. Further, it also contains information on how much any lender charges you when issuing a loan, the amount of money you initially paid to appraise your home, etc.
The HUD-1 Form is used only for reverse mortgages and mortgage refinance transactions. However, before October 15, 2015, the HUD-1 Form was also used for mortgages applied. The closing disclosure forms have replaced the HUD-1 Form for other real estate transactions, and the HUD-1 remains limited to reverse mortgages and mortgage refinance transaction issues. However, whichever form you as an individual receives for your mortgage transactions and other real estate matters, the borrower needs to review the Form before closing. This will help prevent mistakes and avoid errors and other unplanned expenses.
What is a Reverse Mortgage?
A reverse mortgage is a loan that is issued for individuals older than the age of 62. This equity in the home is used to borrow a lump-sum payment, line of credit, or a fixed stream of income. However, the major question that may pop up in your head is probably when the payment is supposed to be paid off. The borrowed amount becomes due when the homeowner dies, sells their house, or plans to relocate.
Understanding the HUD-1 Form
While learning the definition of a HUD-1 Form or the meaning of it is one aspect, fully understanding the HUD-1 Form is an entirely different fort.
Now that you are aware that a HUD-1 Form comprises a comprehensive list of expenses associated with the closure of a transaction, it's important to note that federal law mandates the use of this settlement statement form for reverse mortgages and mortgage refinance transactions. However, there's more to it than just this.
In fact, according to the law, the borrowers must receive a copy of the HUD-1 Form at least a day before the settlement is supposed to be finalized. The primary reason behind this is that if the party believes that any addition, removal, correction, or update can be done on the Form, it can be discussed on the closing table the next day. During settlement, in case any changes have to be made or not, real estate agents, attorneys, or settlement agents are present to review forms, detect errors, and finalize the documents before the closing.
What is Included in the HUD-1 Form?
It may come off surprising to some, but the HUD-1 Form is supposed to be reviewed from the reverse side first. On this Form, the reverse side holds two sections: a left-hand column with the borrower's charges listed down, and the right-hand side of the column holds the seller's charges.
The borrower's side of the list includes all sorts of mortgage charges, which include discount points, loan organization fees, fees for appraisal, payment for a credit report, flood certification, etc. The Form may contain additional information like prepaid interest charges, property taxes, homeowner insurance fees, owner and lender's title insurance, and sometimes the closing agent fee.
On the other side, where the list of the seller charges is itemized, costs such as real estate commission, mortgage pay-off information, and any credit agreed upon by the buyer. However, the seller's side of the list is smaller than the borrower's.
Once the back page is thoroughly reviewed, the HUD-1 back page is added, and the totals are brought to the front side. Then, the amount of cash the borrower has to pay and the amount the seller will pay out are both written at the bottom of the front page.
Are HUD-1 Forms Still Used?
Yes, the HUD-1 Form is still vigorously used to walk the lawful way of dealing with mortgage and real estate issues. This particular Form was replaced by the closing disclosure form back on October 3rd, 2015, and since then, it has been used for several reverse mortgages and refinancing issues. If you heard that the HUD-1 Form stopped working, it probably was false information. The Form is still in work and is widely used to ensure no mortgage issues or problems occur.
Conclusion
The legal and lawful manner of operation has always worked in favor of all. Hence, forms and terminologies adequate to take administrative and right actions have been established since the start. The HUD-1 Form is a statement settlement used by multiple real estate agents and law workers to ensure that all things in the reverse mortgage and refinancing matter work well. If you want to gain detailed information about the HUD-1 Form type, we hope this article was helpful for you.
