closing, as required for all closings involving a federally insured lender under the Real Estate Settlement

Procedures Act (“RESPA”). It is important to save your HUD-1 for your tax preparer. You will need it in

the year of the purchase, as well as the year the property is sold. The HUD-1 form itself was created by

the U.S. Department of Housing and Urban Development (“HUD”) and is updated periodically.

What Does the HUD-1 Show?

The HUD-1 is a multi-part form, divided into sections by topic and divided into the buyer’s side and

seller’s side. The buyer is referred to as the “borrower” because the HUD-1 was created to explain

closings involving lender financing. However, the HUD-1 is also used in cash-only deals when closed by

B.7.) is the lender’s account number for the loan.

HUD-1 Section J and K: Summaries of Costs and Credits

Sections J and K show the transactions between the buyer and seller, and summarize the fees and

payments from Section L on the following page. Line numbers in the 100, 200, and 300 series pertain

to the buyer. Line numbers in the 400, 500, and 600 series pertain to the seller.

The basic transaction between the buyer and seller is shown in the 100 and 400 line series – in other

words, how much the buyer is paying for the house and in what form. The two sides (the buyer’s side

You might notice that line 103 on the buyer’s side, which is the total of all of the buyer’s settlement

charges shown in Section L, does not have a corresponding line on the seller’s side. This is because the

seller’s settlement charges are deducted from the purchase price, rather than credited against the

purchase price as on the buyer’s side. The seller’s settlement charges are found on line 502, where they

are subtracted from the “Gross Amount Due to Seller” on line 420.

The cost of new construction, when not included as part of the purchase price, is stated on line 104. The

purchase price of a manufactured home when charged separately from the price of the land is stated on

line 105.

the seller’s side, the total of the purchase price and other sums due from the buyer to the seller is shown

on line 420 as “Gross Amount Due to Seller.”

The other lines in the 100 and 400 series are used for various reimbursements to the seller. If the

contract requires the buyer to reimburse the seller for his or her prior payments that will benefit the

buyer in the future, those figures are found in lines 104 through 105 and 404 through 405. For example,

the buyer may be required to reimburse the seller for excess tax and insurance reserve accounts if the

buyer assumes the seller’s loan, or the buyer may owe the seller tenant rents that are due prior to the

closing, but remain unpaid and collectible on that date.

money on either line 501 or line 506. The latter depends on whether it is being brought to closing (find

it on line 501), or all or part of the earnest money is being held by a broker as payment of commissions

(find it on line 506).

The face amount of the first purchase money loan is shown on line 202. The amount of a seller’s loan

assumed by the buyer is shown on line 203. Second purchase money mortgages, or home equity loans

that are subordinate to the first purchase money loan, are shown on lines 205 through 209. If the seller

pays for the owner’s title insurance policy, the buyer’s credit for the premium for the owner’s title

insurance policy is shown on line 204, and debited to the seller on line 507.

Assessments are similarly credited and debited in lines 212 and 512, respectively. Any closing cost credit

given by the seller to the buyer will appear in the 200 and 500 line series. Seller’s old loans paid off

through the closing are shown on lines 508 and 509. If there are more payoffs, they can be shown on

lines 513 through 519.

The calculation of the sum of money the buyer must bring to the closing (called the borrower’s “bottom

line”) is found in the 300 series. Everything due from the buyer that was totaled in line 120 is brought

forward to line 301. All credits that reduce the amount due from the buyer are totaled in line 302, and

then subtracted from line 301, resulting in the buyer’s bottom line shown on line 303.

HUD-1 Section L: Detail of Settlement Charges for Buyer and Seller

Section L contains a long list of settlement charges. Charges shown in the left column are to be paid by

the buyer, and charges shown in the right column must be paid by the seller. The settlement charges are

grouped into the following line series:

The buyer can use the HUD-1 to confirm that the actual loan and closing charges have not changed from

the estimated charges the buyer was shown on the Good Faith Estimate (GFE). To make this task easier,

the law requires the title company to reference line items on the GFE within the corresponding line

items on the HUD-1.

Page 3 of the HUD-1 shows the detailed comparison. The law also prohibits increases in the loan

origination fees, points, and transfer taxes from the amounts shown on the GFE, and requires that

government recording charges, and charges for third-party services where the third-party is selected by

the lender or the seller, such as appraisal fees, credit reporting fees, tax service fees, flood certifications,

prepaid mortgage insurance, and title insurance premiums, never increase greater than 10% from the

GFE.