December 17, 2010
The HUD-1 Settlement Statement is a document used to show buyers and sellers the full financial details relevant to their portion of the transaction for the purpose to documenting who has paid or agreed to pay what costs, adjustments, etc. It also shows how much money the buyer needs to bring to the transaction up front in order to close the deal.
The first page of the Settlement Statement provides the buyer with a list of all costs and related figures. The area called Section J is for the FHA borrower while Section K lists the seller’s part of the deal. Buyers are required to get Section J but they may not necessarily be furnished a copy of Section K, the seller’s portion.
Section J, the “Summary of Borrower’s Transaction” includes the contract sales price, and the amount of any personal property being sold along with the home–appliances and similar items are often listed here where applicable. Any required adjustments such as assessments or taxes (paid in advance by the seller) are included.
A “Gross Due From Borrower” figure shows the total amount due once the math has been done on the price, seller-paid adjustments and cost of personal property. The Gross Due figure is the total amount of the transaction. Gross Due From Borrower is used as part of a math equation on the HUD-1 document that shows how much the buyer owes at closing time.
On HUD-1 you’ll find a list of amounts “Paid By Or In Behalf Of the Borrower” which include earnest money deposits and FHA loan principal–the FHA loan amount approved for this particular transaction.
Paid By/On Behalf of the Borrower amounts also include “Adjustments for Items Unpaid By Seller” which can include taxes and assessments. The amounts paid plus adjustments are totaled.
To get the amount the buyer should bring to the table to close the deal, take the Gross Amount Due From Borrower and subtract the Amounts Paid By/For Borrower. The total you get is generally (according to the FHA) the amount needed to be exchanged when the deal closes.
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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