February 9, 2011
Buying a home with an FHA loan involves a process with a set of milestones along the way. The first of set of milestones includes finding a suitable home, negotiating a price, applying and being approved for a home loan and agreeing to the terms and conditions. When it’s finally time to close the deal, sign on the dotted line and get ready to take possession of the property, there’s another important part of the process–getting a HUD-1 Settlement Statement.
The HUD-1 is basically an itemized list of all costs, fees, and charges. Some are paid by the seller, some are paid by the buyer, and some are paid by the lender. All the charges are included to comply with federal laws requiring transparency in the real estate transaction.
The HUD-1 Settlement Statement is so detailed that it even breaks down the costs and charges into sections including cash due at settlement time to the FHA borrower or the seller, any applicable broker’s commission, and items paid in advance such as taxes and assessments. Title charges, government recording and transfer charges, plus all other items payable in connection with the FHA home loan will be listed in detail.
The Settlement Statement is required by RESPA and other laws, and FHA loan applicants should read over the document carefully to make sure there are no errors, omissions or other problems with the document. In most cases the borrower will find everything in order, but in the event there is a question an FHA borrower should not hesitate to ask, even if it threatens to delay closing the deal.
The FHA recognizes that some issues don’t come to light until after the deal is done–even if you read the HUD-1 Settlement Statement carefully you may not realize there are questions until later.
That’s one reason why the FHA advises borrowers to be proactive–if questions arise at any point during the lifetime of the FHA mortgage, the FHA has this advice:
“If you have a question any time during the life of your loan, RESPA requires the company collecting your loan payments (your “servicer”) to respond to you. Write to your servicer and call it a “qualified written request
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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