How to Read Your Closed Statement

A closing statement from the course of a real estate transaction often referred to as HUD 1 or HUD is a record of each cent involved when the ownership transfer of an item of real estate.

A closing report (or the HUD) is split into two columns: one column for buyers and the other that is for the vendor. The side for the buyer totals all the expenses associated in buying the house and provides credit for the loans, any deposit from the buyer or seller. The seller’s side considers the amount paid for the property and takes out any costs, such as commissions, assistance from sellers and remaining loan balance(s) and deed preparation and transfer tax.

The buyer’s side is typically the most complex of the two since a large portion of the figures is referred to as the ‘Closing Costs.’ The closing costs that are associated with the buyer’s part of the transaction are typically comprised of the costs associated with the process of obtaining the mortgage. The terms like discounts points, origination fees tax service fee flood certification fee document review fee or underwriting fee, title insurance (both the lender’s and owner’s guidelines) as well as survey fees are just a few costs that a buyer has to pay for during the mortgage process.

A lot of times, questions from buyers are asked at the table of closing when the costs associated with buying are given line-by-line and it can feel like it is invasive. In law, there must be no fee for the LENDER that is listed on the HUD which wasn’t disclosed in the Good Faith Estimate that was provided to the buyer when they applied for the loan. If there’s a fee that is not listed on the GFE the lender could get into trouble. RESPA (The Real Estate Settlement and Protection Act) regulates a large portion of the procedure and to break the RESPA rules is to be guilty of an Federal crime. The compliance departments of lenders and any lawyer who is familiar with the closing of real estate deals are fully aware of the regulations that govern the integration of the GFE as well as the HUD.

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