HUD-1 statement

You need to understand what an HUD-1 statement is. Here’s what to know.

What is an HUD-1 statement?

The HUD-1 statement is a settlement form used to itemize and reconcile all the charges paid by the buyer and seller in purchasing real estate. The form is currently used for the settlement of reverse mortgages and mortgage refinancing. For other mortgages, the newer closing disclosure is used.

Deeper definition

When you purchase real estate, take out a reverse mortgage or refinance your property, there are numerous transactions that take place before closing. These include:

  • Loan fees.
  • Insurance.
  • Taxes
  • Assessment fees.
  • Commissions.
  • Escrow payments.

The HUD-1 Settlement Statement itemizes every transaction, providing the buyer and seller with full disclosure of all costs incurred and to whom they are paid.

This document was used for all real estate transactions until Oct. 3, 2015, when it was replaced by the more comprehensive closing disclosure document. It remains in force for reverse mortgages and mortgage refinancing.

In terms of the Real Estate Settlement Procedures Act (RESPA), borrowers must be provided with a copy of the HUD-1 Settlement Statement at least one day before settlement.

The HUD-1 form is prepared by the settlement or closing agent. Although the settlement agency could be the title agency, mortgage broker or bank, it is often considered better to hire a real estate attorney to handle the closing.

The HUD-1 statement has two columns. The left-hand column lists borrower’s charges and the right-hand column lists those incurred by the seller. The final pages list the good faith estimate provided by the lender as well as the lender’s final figures.

Below this section, you will find the loan terms that specify the amount you borrowed, the loan term, interest rate, payments and other relevant information.

In transactions that don’t include a seller, such as a reverse mortgage, the shorter HUD-1A form is often used. The HUD-1 statement is an important document that you should keep in a safe place.

HUD-1 statement example

If you decide to refinance your home so as to benefit from lower interest rates or to reduce the term of your loan, you will be provided with either a HUD-1 or HUD-1A form before closing. Because mistakes can and do happen, you should check this form carefully and bring any errors to the settlement agent’s attention at once so they can be corrected.


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