HUD is an acronym for the Department for Housing and Urban Development. The department of HUD does a lot for home owners, such as provide payment assistance for low income families, insures mortgages for home buyers, and even helps support housing for the homeless.
That’s a brief description of what HUD is as an organization, but HUD (like many other real estate terms) has another meaning as well.
The Closing Statement (or Settlement Statement) is often referred to as the HUD-1. It gets this name because the document is printed by the Department of Housing and Urban Development.
Some common things you’ll see on your HUD-1:
- Sale Price
- Loan Amount
- Origination Fees
- Earnest Money
- Abstract Fees
- Title Transfer Fees
- Hazard Insurance Escrow
- Attorney’s Fees
- Closing Fees
- Real Estate Commissions
- Recording Fees
- Many, Many More
As you can see, the HUD-1 is basically a document that summarizes the transaction from a number’s standpoint. It states what the buyer is paying and receiving, and also what the seller is paying and receiving.
No other payments, fees, paybacks, or charges to the transaction can be exchanged if they are not on the Closing Statements. A lot of Lenders and Agents got in trouble for illegal kickbacks and referral fees for inflating the sale price, just for a monetary gain on their part.
Luckily, every transaction is held to the same guidelines, so no matter how you’re paying for your next home the numbers should all appear on the HUD-1 statement.
If a broker says something like “off the books” or “money back at closing” that should raise a red flag for you.
If you’d like to learn more about real estate terms, or if you’re buying your first home in the coming year, check out more terms at Word of The Week.