Kari Monk, over at Wells Fargo, shared a copy of the new HUD-1 Settlement Statement a few weeks ago, and when I looked it over, I was pleased. Since then, I’ve talked to a number of other real estate agents who heard it was coming, but had no idea of the changes that had been made.
The HUD-1 is a statement drawn up by the title company that provides:
- The type of loan (FHA, VA, or conventional)
- Buyer, seller, property, and settlement agent information
- A summary of both the buyer’s costs , which will include proration of property taxes, down payment, and loan amounts
- Details of seller’s proceeds, after tax proration and loan payoff (if any)
- Details of the settlement charges, including real estate broker fees, loan costs, lender required reserves for insurance and property taxes, and title charges
The new and revised HUD-1 includes two new sections:
- A comparison of the buyer’s lender’s original Good Faith Estimate with the HUD-1 figures completed for closing. These costs include the loan origination charge, discount points, escrow fee, and title insurance.
- A section for loan terms, which are spelled out in plain English.
I love the Loan Term section!
Look at these straightforward questions where really important questions about the home buyer’s loan are answered.
- Your initial loan amount is ___.
- Your loan term is ___ years.
- Your initial interest rate is ___%.
- Your initial monthly amount owed for principal, interest, and any mortgage insurance is $___.
- Can your interest rate rise? Yes or no.
- Even if you make payments on time, can your loan balance rise? Yes or no.
- Even if you make payment on time, can your monthly amount owed for principal, interest and mortgage insurance rise? (And if so, how much.)
- Does your loan have a prepayment penalty? Yes or no.
- Does your loan have a balloon payment? Yes or no.
- Total amount owed included escrow account payments
Some have expressed concern about this new form. I, for one, think it’s a great improvement and can’t wait to see in use.
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I’m with ya’ Dru… Not sure why people have concerns about the new form. These questions seem like a no-brainer. Unfortunately, there have been companies that say one thing and deliver another. Hopefully, this is a BIG step in the right direction.
.-= Rail Life´s last blog ..METRO chooses new CEO =-.
Those new questions on page three of the new HUD-1 are great and will hopefully go long way to helping folks understand what the heck they’re getting into. I’d have put it right there on the first page though and also have them on the good faith estimate, too.
.-= Rob Cook´s last blog ..Carnival of Real Estate #168 – Star Trek Version =-.
Nick, Anything to clarify the process has got to help.
Rob, …on the first page, what a great idea. So’s the concept of putting it on the good faith estimate.
Rob
.-= Dru Bloomfield´s last blog ..Do I have to sell my home to qualify for the homebuyer tax credit? =-.