Settlement THE process
Settlement Pros is a highly experienced settlement company exclusively dedicated to transactions in the District of Columbia, Maryland and Virginia. Our team is committed to providing customers with exceptional service whether you are purchasing, selling or refinancing your home. Our expertise and understanding of real estate settlements enables us to anticipate the unexpected, and always have an appropriate solution. Our company is dedicated to making every transaction a smooth and seamless process for all parties involved. The Settlement Guide is designed to introduce the settlement process and to provide a clear explanation of some of the terminology you will want to be familiar with prior to closing. You will find a line by line explanation of the charges found on the settlement statement, also known as the HUD-1. We hope to remove some of the uncertainties you may have regarding the process of settling on your home. Settlement Pros is available to discuss any questions you may have and we are always available as a resource at all stages of your transaction. We believe that you will find our team of Settlement Pros provides the highest level of customer service which will surpass your expectations. Sincerely, Carol Lynn Calomiris, Esq. Managing Attorney Settlement Pros
Explanation of Page 1 of Settlement Statement (also known as HUD-1 or Closing Statement) Below are explanations of key items on the settlement statement. Note that the number listed corresponds to the line number on the settlement statement. Our Attorney will explain this form in detail at the time of closing. SUMMARY OF BORROWER S TRANSACTION Gross Amount Due from Borrower (Costs to the Buyer) 101. Contract Sales Price The full purchase price as stated in the sales contract. 103. Settlement Charges to Borrower Total charges, carried forward from line 1400 on page 2. 106 112. Adjustments for Items Paid by Seller in Advance Buyer will reimburse the Seller for taxes, HOA/COA dues or special assessments that were paid in advance by the Seller. The adjustment is from the date of settlement to the end of the pre-paid period; may be monthly, quarterly, annual or fiscal year end. Amounts Paid By or On Behalf of the Borrower (Credits to the Buyer) 201. Deposit or Earnest Money All monies the Buyer deposited in advance per the sales contract with the escrow agent/settlement company. 202. Principle Amount of New Loan(s) The loan amount. 203. Existing Loan(s) Taken Subject to Applicable only to assumption loans (rare). 207 209. Empty Lines If any closing cost credit was negotiated, this line item is a credit to Buyer and charged to Seller on corresponding line. 210 219. Adjustments for Items Unpaid by the Seller Typically, the Buyer is responsible for paying all bills received after closing. It is here that the Seller reimburses the
A. Settlement Statement (HUD-1) OMB No. 2502-0265 B. Type of Loan 1. FHA 2. RHS 3. Conv Unins 4. VA 5. Conv Ins. 6. Seller Fin 7. Cash Sale. 6. File Number FHSPD 7. Loan Number 8. Mortgage Ins Case Number C. Note: This form is furnished to give you a statement of actual settlement costs. Amounts paid to and by the settlement agent are shown. Items marked "(p.o.c.)" were paid outside the closing; they are shown here for informational purposes and are not included in the totals. D. Name & Address of Borrower BUYER E. Name & Address of Seller SELLER F. Name & Address of Lender LENDER G. Property Location District of Columbia County, DC 123 Main Street Washington, DC H. Settlement Agent Name Settlement Professionals, LLC Underwritten By: Title Insurer Company Place of Settlement Settlement Professionals, LLC 5101 Wisconsin Avenue, NW, Suite 101 Washington, DC 20016 J. Summary of Borrower's Transaction K. Summary of Seller's Transaction 100. Gross Amount Due from Borrower 400. Gross Amount Due to Seller I. Settlement Date 101. Contract sales price $850,000.00 401. Contract sales price $850,000.00 102. Personal property 402. Personal property 103. Settlement charges to borrower $18,898.00 403. 104. 404. 105. 405. Adjustments for items paid by seller in advance Adjustments for items paid by seller in advance 106. City property taxes 406. City property taxes 107. County property taxes 407. County property taxes 108. Assessment Taxes 408. Assessment Taxes 109. School property taxes 409. School property taxes 110. Ground Rent Taxes 410. Ground Rent Taxes 111. Front Foot Benefit Taxes 411. Front Foot Benefit Taxes 112. 412. 113. 413. 114. 414. 115. 415. 116. 416. 120. Gross Amount Due From Borrower $868,898.00 420. Gross Amount Due to Seller $850,000.00 200. Amounts Paid By Or in Behalf Of Borrower 500. Reductions in Amount Due to Seller 201. Deposit or earnest money $8,500.00 501. Excess deposit (see instructions) 202. Principal amount of new loan(s) $680,000.00 502. Settlement charges to seller (line 1400) $12,810.00 203. Existing loan(s) taken subject to 503. Existing loan(s) taken subject to 204. 504. Payoff of first mortgage loan 205. 505. Payoff of second mortgage loan 206. 506. 207. 507. (EMD $8,500 Disbursed as Proceeds) 208. 508. 209. 509. Adjustments for items unpaid by seller Fund: Adjustments for items unpaid by seller 210. City property taxes 510. City property taxes 211. County property taxes 511. County property taxes 212. Assessment Taxes 512. Assessment Taxes 213. School property taxes 513. School property taxes 214. Ground Rent Taxes 514. Ground Rent Taxes 215. Front Foot Benefit Taxes 515. Front Foot Benefit Taxes 216. 516. 217. 517. 218. 518. Water Escrow $200.00 219. 519. 220. Total Paid By/For Borrower $688,500.00 520. Total Reduction Amount Due Seller $13,010.00 300. Cash At Settlement From/To Borrower 600. Cash At Settlement To/From Seller 301. Gross Amount due from borrower (line 120) $868,898.00 601. Gross Amount due to seller (line 420) $850,000.00 302. Less amounts paid by/for borrower (line 220) $688,500.00 602. Less reductions in amt. due seller (line 520) $13,010.00 303. Cash From Borrower $180,398.00 603. Cash To Seller $836,990.00 Previous editions are obsolete Page 1 of 3 HUD-1 File No. FHSPD DATE PRINTED:
Buyer for those charges incurred but not required to be paid prior to settlement, such as real estate taxes and home-owner association dues not yet due. The Buyer is credited for the period from the last payment to the date of settlement. SUMMARY OF SELLER S TRANSACTION Gross Amount Due to Seller (Credits to the Seller) 401. Contract Sales Price Purchase price as stated in the sales contract. 406 412. Adjustments for Items Paid by Seller in Advance Buyer reimbursement to Seller for taxes, homeowners dues or condo fees paid in advance by the Seller. The adjustment is from the date of settlement to the end of the pre-paid period; may be monthly, quarterly, annual or fiscal year end. Reductions in Amount Due to Seller (Costs to the Seller) 502. Settlement Charges to the Seller The Seller s total charges, carried forward from line 1400 on page 2. 503. Existing Loan(s) Taken Subject to Applicable only to assumption loans (rare). 504 505. Payoff of First and Second Mortgages The costs include: Outstanding principal balance of the loan, plus interest which is due from the first of the month up through settlement, plus a cushion to allow for processing and transmission to the lender. (Reminder: interest is paid in arrears). Please note: FHA payoffs will include interest through the end of the month in which the loan will be paid. Lenders will release the balance in the escrow account after the loan has been paid and satisfied. The lender will forward the escrow funds directly to the Seller, usually within 30 to 45 days. It is customary to include extra interest to assure an overpayment that will be returned directly from your lender. 510 519. Adjustments for Items Unpaid by Seller The Buyer is responsible for paying all bills received after closing. It is here that the Seller reimburses the Buyer for those charges incurred but not required to be paid prior to settlement, such as real estate taxes and homeowner association dues or water escrows. The Buyer is credited for the period from the last payment due date through the date of settlement.
Explanation of Page 2 of Settlement Statement The second page of the settlement statement itemizes all settlement fees assessed to the Buyer and Seller. Note: Items marked POC denotes Paid Outside of Closing. SETTLEMENT CHARGES 703. Commission Paid at Settlement Real estate commission disbursed by the settlement agent. 704. Earnest Money Deposit to Selling Agent s Company POC See lines 201/506 If deposit held by Broker, this is the balance of commission POC from deposit. Items Payable in Connection with Loan (for the Buyer) 801. Our Origination Charge Total lender/mortgage broker fees for processing and underwriting to originate the loan. Each point is 1 percent of the loan amount and will appear here as well. 802. Your Credit or Charge (points) for the Specific Interest Rate Chosen May be a credit or a charge for points (each point is 1 percent of the loan amount) and any mortgage broker credits. 803. Your Adjusted Origination Charges Net adjusted loan origination charge (sum of lines 801 and 802). 804 807. Other Fees charged for other services required to prepare the loan, such as appraisal and
L. Settlement Charges 700. Total Real Estate Broker Fees $0.00 Paid From Paid From Division of Commission (line 700) as follows: Borrower's Seller's 701. to LISTING AGENT Funds at Funds at 702. to SELLING AGENT Settlement Settlement 703. Commission Paid at Settlement $0.00 $0.00 (EMD $8,500 to SELLING AGENT 704. to P.O.C.) 800. Items Payable in Connection with Loan 801. Our origination charge $0.00 (from GFE #1) 802. Your credit or charge (points) for the specific interest rate chosen $0.00 (from GFE #2) 803. Your adjusted origination charges to 804. Appraisal Fee to 805. Credit report to 806. Tax service to 807. Flood certification to 900. Items Required by Lender To Be Paid in Advance (from GFE A) (from GFE #3) (from GFE #3) (from GFE #3) (from GFE #3) 901. Daily interest charges from to @$0/day (from GFE #10) 902. Mortgage Insurance Premium for months to (from GFE #3) 903. Homeowner's insurance for years to (from GFE #11) 904. Real Estate Taxes to DC Treasurer 1000. Reserves Deposited With Lender 1001. Initial Deposit for your escrow account (from GFE #9) $0.00 1002. Homeowner's insurance months @ per month 1003. Mortgage insurance months @ per month 1004. City property taxes months @ per month 1005. County property taxes months @ per month 1006. Assessment Taxes months @ per month 1007. School property taxes months @ per month 1008. Ground Rent Taxes months @ per month 1009. Front Foot Benefit Taxes 0 months @ 1010. Other taxes 0 months @ 1011. Aggregate Adjustment 1100. Title Charges 1101. Title services and lender's title insurance to Settlement Professionals, LLC (from GFE #4) $4,167.80 1102. Settlement or closing fee to Settlement Professionals, LLC 1103. Owner's title insurance to Settlement Professionals, LLC (from GFE #5) $1,997.20 1104. Lender's title insurance to Settlement Professionals, LLC $3,232.80 1105. Lender's title policy limit $680,000.00 1106. Owner's title policy limit $850,000.00 DC -Enh Own/Basic Loan Settlement Professionals, 1107. Agent's portion of the total title insurance premium to LLC $4,707.00 1108. Underwriter's portion of the total title insurance premium to Title Insurer Company $523.00 1109. ICL Fee to Title InsurerCompany $50.00 (from GFE #4) $0.00 1110. Title Abstract/Search to Red Rock Title, LLC $235.00 (from GFE #4) $0.00 1111. Release Tracking (1) to require, LLC $35.00 1200. Government Recording and Transfer Charges 1201. Government recording charges (from GFE #7) $188.00 1202. Deed $31.50 ; Mortgage $156.50, Release $0.00 to D.C. Treasurer 1203. Transfer taxes (from GFE #8) $12,325.00 1204. City/County tax/stamps Deed $12,325.00 ; Mortgage $0.00 to D.C. Treasurer 1205. State tax/stamps Deed $12,325.00 ; Mortgage $0.00 to D.C. Treasurer $12,325.00 1300. Additional Settlement Charges 1301. Required services you can shop for (from GFE #6) 1302. Survey to Snider & Associates $220.00 1303. Termite Inspection to 1400. Total Settlement Charges (enter on lines 103, Section J and 502, Section K) $18,898.00 $12,810.00 POC (B) Paid Outside of Closing by Borrower. POC (S) Paid Outside of Closing by Seller. POC (L) Paid Outside of Closing by Lender. $450.00 Previous editions are obsolete Page 2 of 3 HUD-1 File No. FHSPD DATE PRINTED:
credit report, tax services or flood certification (can sometimes be shown in the 1300 block). Items Required by Lender to Be Paid in Advance 901. Daily Interest Charges Prepaid interest usually collected from the date of settlement to the end of that month. First mortgage payment will be due the 1st day of the following month. Example: Settlement date on September 7, upfront interest will be collected September 7 through September 30, making the first mortgage payment due November 1. The November payment is applied to October s interest. 902. Mortgage Insurance Premium Up front amount paid to Federal Housing Association (FHA) or Veteran s Administration (VA Funding Fee) to secure your loan. 903. Homeowner s Insurance for Years Up front annual insurance payment needed to secure loan; can be POC. Reserves Deposited with Lender 1001. Initial Deposit for Your Escrow Account TOTAL of all section 1000 escrow items, including any aggregate adjustment credit, line 1011. 1002. Hazard Insurance In addition to the principal and interest payment, each month the Buyer will pay a set amount into the lender s escrow account. 1003 1010. Depending on the local county or state, some of these other sections will apply and be a part of the monthly amount deposited into the lender s escrow account. 1011. Aggregate Adjustment Lender credit to you at settlement for any overages collected in establishing initial escrow account. Title Charges 1101. Title Services and Lender s Title Insurance This fee may vary from state to state and includes all charges required to issue title insurance (e.g., title search, title examination, binder fee, courier fees, cost of the lender s title insurance, fee for document preparation and conducting settlement). 1102. Settlement or Closing Fee (Seller Charge) Seller charge for preparing the closing documents and conducting settlement. 1103. Owner s Title Insurance Cost of owner s coverage title insurance premium. Unlike most insurance, Buyer only pays for title insurance once at the time of purchase. This premium amount is based on the contract sales price of the home and is state regulated. 1109. ICL Fee Title Insurer fee for the issuance of an insured closing letter. 1111. Prepare/Obtain Release Fee (Seller Charge) Fee for obtaining the release of any loan secured by the property.
Government Recording and Transfer Charges 1201 1202. Government Recording Charges Charge for recording the deed of conveyance and mortgage or deed of trust in the land records. 1203 1205. Transfer/Recordation Taxes as applicable per the contract. Additional Settlement Charges 1301. Required Services You Can Shop for This is the total of lender -services you can shop for yourself, e.g., tax service fee and flood determination fee. 1302. Survey Fee You may choose between a basic house location drawing or a boundary survey. 1303. Pest Inspection This is a fee for having the property inspected for wood-destroying insects, paid per contract. 1400. Total Settlement Charges This total is carried forward to page 1 on line 103 for the Buyer and line 502 for the Seller.
Explanation of Page 3 of Settlement Statement The third page of the HUD-1 is divided into two sections the first being the comparison chart between the Good Faith Estimate and the actual fees charged at settlement. The second is an overview of the loan terms. The comparison chart is broken down into three -different buckets. BUCKET 1 Comparison of the Good Faith Estimate (GFE) and the HUD-1 Charges This specifically compares the fees quoted to the Buyer on the final GFE to the actual charges listed on the HUD-1 settlement statement. In this bucket the GFE charges must be the same or more than the actual charges on the HUD-1. If the HUD-1 charges are more than the GFE charges, the Lender must provide a credit to the Buyer for the difference. BUCKET 2 Charges That in Total Cannot Increase More Than 10 Percent These charges include services needed to process the loan, title insurance and all government recording charges. This is a comparison of the GFE to the actual charges on the HUD-1 settlement statement. If any of these charges have more than a 10 percent variance, the lender will need to remedy the difference, most often with a credit to the Buyer either at the time of closing or within 30 days. BUCKET 3 Charges That Can Change These are services that are needed to complete the loan process but the Buyer may choose the company they want to use to perform the work. In most cases this will be a termite inspection and homeowner s insurance coverage. This section also includes daily interest charges and the initial deposit for your escrow account. LOAN TERMS This section clearly sets forth all of the terms of the Buyer s loan including loan amount, loan terms, interest rate, monthly mortgage payment broken down into principal, interest, insurance, taxes and mortgage insurance, if applicable. It will also explain the type of mortgage the Buyer has locked into (e.g., 30-year, 15-year, or adjustable-rate loan). If the rate adjusts, this information will be itemized. If the loan has a pre-payment penalty or a balloon payment, this will also be noted. Make sure to look at this section carefully and that the terms listed in this section are exactly what was set forth in the GFE. If these terms differ in any way, contact the lender immediately for clarification.
Comparison of Good Faith Estimate (GFE) and HUD-1 Charges Good Faith Estimate HUD-1 Charges That Cannot Increase HUD-1 Line Number Our origination charge # 801 $0.00 $0.00 Your credit or charge (points) for the specific rate chosen # 802 $0.00 $0.00 Your adjusted origination charges # 803 $0.00 $0.00 Transfer taxes # 1203 $12,235.00 $12,325.00 Charges That in Total Cannot Increase More Than 10% Good Faith Estimate HUD-1 Government recording charges # 1201 $188.00 $188.00 Appraisal Fee # 804 $0.00 $0.00 Credit report # 805 $0.00 $0.00 Tax Service Fee # $0.00 $0.00 Flood Certification Fee # $0.00 $0.00 Survey # 1302 $220.00 $220.00 Termite Inspection # 1303 $0.00 $0.00 Title services and lender's title insurance # 1101 $4,167.80 $4,167.80 Owner's title insurance # 1103 $1,997.20 $1,997.20 Total $6,573.00 $6,573.00 Increase between GFE and HUD-1 Charges $0.00 or 0% Charges That Can Change Good Faith Estimate HUD-1 Initial deposit for your escrow account # 1001 $0.00 $0.00 Daily interest charges # 901 $0/day $0.00 $0.00 Homeowner's insurance # 903 $0.00 $0.00 Loan Terms Your initial loan amount is $680,000.00 Your loan term is 30 years Your initial interest rate is % Your initial monthly amount owed for principal, interest, and any mortgage insurance is Can your interest rate rise? $0.00 includes o Principal o Interest o Mortgage Insurance x No. Yes, it can rise to a maximum of 0%. The first change will be on and can change again every after. Every change date, your interest rate can increase or decrease by 0%. Over the life of the loan, your interest rate is guaranteed to never be lower than 0% or higher than 0%. Even if you make payments on time, can your loan balance rise? x No. Yes, it can rise to a maximum of $0.00 Even if you make payments on time, can your monthly amount owed for principal, interest, and mortgage insurance rise? x No. Yes, the first increase can be on and the monthly amount owed can rise to $0.00 The maximum it can ever rise to is $0.00 Does your loan have a prepayment penalty? x No. Yes, your maximum prepayment penalty is $0.00 Does your loan have a balloon payment? x No. Yes, you have a balloon payment of $0.00 due in 0 years on Total monthly amount owed including escrow account payments x You do not have a monthly escrow payment for items, such as property taxes and homeowner s insurance. You must pay these items directly yourself. You have an additional monthly escrow payment of that results in a total initial monthly amount owed of. This includes principal, interest, any mortgage insurance and any items checked below: o Property taxes o Homeowner's Insurance o Flood insurance o o o Note: If you have any questions about the Settlement Charges and Loan Terms listed on this form, please contact your lender. Previous editions are obsolete Page 3 of 3 HUD-1 File No. FHSPD DATE PRINTED:
Notes
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