HUD stands for Housing and Urban Development, a representative of the arm of the U.S. government department. This department is responsible for legislation relating to home ownership and property development within the United States.
There are few different ways a HUD-1 Statement is referred to. Sometimes you will hear it called the “Settlement Statement”, or “Closing Statement”This document used when a borrower has obtained lending funds to purchase real estate, whether it be vacant land or a home purchase. Another “relation” to the HUD form is the good faith Estimate a.k.a, GFE The ‘Good Faith Estimate’ was incorporated into the HUD by the lender in order to compare with the final HUD figures.
When is a HUD-1 Settlement Statement Used?
The closing agent, will prepare a HUD-1 settlement statement at the closing of a real estate loan. The settlement states all costs involved with the real estate loan and to whom the individual charges and fees will be paid to.This provides the borrow and the seller with a concise breakdown of all costs involved. Good Faith Estimate figures will typically be sent from the lender to the settlement agent within three days of application of the loan.
What is Escrow?
Once the prospective purchaser signs off on a contract, the next step is collecting a Good Faith Deposit from the purchaser, which is then put into an escrow account. Escrow funds are money that the bank wants on reserves that will be used to pay your upcoming bills for the home. These escrows are usually for property taxes, school taxes, county taxes and home owners insurance.
What is Title Insurance?
A title insurance policy is a mandatory insurance policy taken out when you are taking out a mortgage. This protects, the prospective homeowner with issues that can arise pertaining to the title. Some calls this protection from any clouds they may exist, be it, problems with the past deeds, i.e. missing signatures or invalid information or more extreme issues pertaining to fraud, for example.
What is The Difference Between GFE & Final HUD?
Many times the GFE and the final HUD figures will indeed reflect differently from each other. The GFE figures are presented by a lender within 3 days of applying for the loan. In many instances, these figures may increase or decrease. A majority of the lending institutions have their own rates and sliding scales when it comes to fees. These good faith estimate disclosures cannot exceed a 10% tolerance given by an institution.
