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Understanding the HUD-1 Settlement Statement

Line by line description

Section 800, Items Payable in Connection with Loan

The entries on these lines are most often paid from the buyer's funds, although in some cases sellers agree to pay specified amounts to help the buyer close.

Line 801 shows the fee the lender charged for processing or originating the loan. If the fee is a percentage of the loan amount, the percentage will be stated.

Line 802 is used to record the "points" charged by the lender. Each point is 1% of the loan amount.

Line 803 is used to record appraisal fees. You may have paid the fee when you applied for the loan. If so, it should be marked "POC," for paid outside of closing. The amount would be shown, but would not be included in the total fees you bring to settlement.

Line 804 is used to record the cost of the credit report if it is not included in the Origination Fee.

Line 805 includes charges for inspections done at the request of the lender. Other pest and structural inspections are recorded in another area.

Line 806 is for an application fee that might be required by a Private Mortgage Insurance (PMI) company.

Line 807 is only used for loan assumption transactions, where the buyer takes over the seller's existing mortgage.

Lines 808 to 811 are used for miscellaneous items connected with the loan, such as fees paid to a mortgage broker.

Section 900
, Items Required by Lender to be Paid in Advance

These charges are typically paid by the buyer. They are all items which the lender requires, but which are not always paid to the lender.

Line 901 is used to record interest that is collected at settlement for the time period between closing and the first monthly payment.

Line 902 shows mortgage insurance premiums that are due at settlement. Escrow reserves for mortgage insurance are recorded later. If your mortgage insurance is a lump sum payment good for the life of the loan it should be noted.

Line 903 is used to record hazard insurance premiums that must be paid at settlement in order to have immediate insurance on the property. It is not used for insurance reserves that will go into escrow.

Lines 904 and 905 are for miscellaneous items, such as flood insurance, mortgage life insurance, credit life insurance and disability insurance premiums.

Section 1000
, Reserves Deposited with Lender

This section is used to itemize escrow funds collected by the lender from the borrower for such things as hazard insurance and property taxes. The number of months charged varies, but there are limits as to how much the lender can collect.

The borrower paid current charges for the expenses in Section 900. The entries on lines 1001-1007 are for funds used to start the borrower's escrow account, from which the lender will pay next year's premiums. Each mortgage payment includes an amount that covers a portion of these recurring expenses.

Line 1008 is an escrow adjustment calculated by the settlement agent by comparing different escrow formulas. This step is to make sure the lender is not collecting more escrow funds than are allowed. The figure is always zero or a negative number.

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