Have you seen a HUD? Did you review the HUD? Do you agree with the HUD? Have you signed off on the HUD? What exactly is a HUD? The short answer – it is the settlement statement.
I think folks in our industry tend to take for granted that everyone knows what a HUD is. In fact, we in the industry have given a name to a document that is somewhat misleading. When referring to a “HUD” (see the above questions), one is most likely talking about the HUD-1 Form that is used throughout the nation as the standard settlement statement in residential real estate transactions. HUD actually stands for Housing and Urban Development with the Form HUD-1 being the Housing and Urban Development Form 1.
The HUD is the closing statement that sets out the purchase price you are paying for the home along with any closing costs you are incurring and credits that you are receiving. By way of example, any lender fees must be shown on the HUD as well as any legal fees you are being charged. Once the closing agent, or settlement agent, has prepared the HUD they will send it to you for your review. Hence the above questions about whether you have “seen the HUD” or “signed off on the HUD”. The closing agent will want you to have had time to review the settlement statement (the “HUD”) before you come to closing. The HUD will include the total amount of money necessary for you to pay in order to close on the home. For example, if the home you are buying is $400,000.00 and the costs you have incurred equal $5,000.00, then you will have to bring $395,000.00 to closing – if you are paying cash. Using the same example, if you obtained financing from a lender in the form of a loan for an amount of $320,000.00 you would only then need to bring $75,000.00 to closing. That is a pretty straight forward example and does not include any credits you may receive in the form of seller paid closing costs or credits for seller’s tax proration, but you get the picture. One thing to remember, the HUD controls all of the funds associated with your closing. If it is not shown on the HUD, you will not be charged for it or receive a credit for it. Review your HUD carefully!
Now, the next time someone asks you “have you seen the HUD yet?” you will know that they are simply wanting to know if you have had a chance to see and review the settlement statement for your closing. Pretty simple, right?
As always, if there is anything we can help you with please do not hesitate to contact Conrad Trosch & Kemmy, P.A. We are here to help!