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What the heck is a HUD?

April 16, 2010 - Dylan Renz
Most anyone who has bought or sold a home in the United States since 1974 has seen a form called a HUD-1 Settlement Statement or “the HUD”, as it is affectionately referred to by those in the real estate business.
In 1974, the Real Estate Settlement Procedures Act (RESPA) began requiring that the HUD-1 Settlement Statement be used as the standard settlement form for all transactions involving federally related mortgage loans. However, here in Southwest Florida it is used for nearly every transaction, including cash transactions that do not involve a mortgage at all.
The basic concept of the HUD is to show a detailed accounting of all of the money involved in the transaction. Not just the purchase price, but real estate commissions, closing costs, prorated taxes, etc. RESPA states that all parties to a contract should receive the HUD at least one day prior to closing. However, in reality HUD statements are sometimes completed just hours before a closing takes place.
The idea was to simplify the numbers so that buyers and sellers could clearly see how the money was being calculated and distributed. Of course, as with anything form the government designs the HUD is anything but simple and easy to understand. It is crucial that you have a real estate professional or your closing agent go over the form with you in detail to ensure that you understand exactly where all of YOUR money is going.


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