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HUD-1 Settlement Statement

AMOUNTS PAID BY OR IN BEHALF OF BORROWER:

Section 200 lists amounts paid by the borrower or on behalf of the borrower.

This will include the earnest money deposit the buyer paid with the agreement of sale, the loan(s) the buyer is getting and any loan(s) the buyer may be assuming.

Beginning at Line 210, adjustments are made for items that the seller owes (such as taxes, assessments) but for which the borrower will pay after settlement.

The seller will usually pay or credit the buyer this portion at settlement.

 

200. AMOUNTS PAID BY OR IN BEHALF OF BORROWER:
201. Deposit of earnest money 2,000.00
202. Principal amount of new loan(s) 80,000.00
203. Existing loan(s) taken subject to  
204.  
205.  
206.  
207.  
208.  
209.  
Adjustments for items unpaid by seller
210. City/town taxes to  
211. County taxes 1/1 to 6/30 $1,200/ year 600.00
212. Assessments 1/1 to 6/30 $200/yr. 100.00
213.  
214.  
215.  
216.  
217.  
218.  
219.  
220. TOTAL PAID BY/FOR BORROWER 82,700.00

 

In the above example, the borrower paid an earnest deposit of $2,000 (line 201) and is getting a loan for $80,000 (Line 202).

A tax of $1200 and an assessment of $200 are due at the end of the year. The seller will pay the borrower for six months or one-half of this amount (line 211 and Line 212).

Line 220 shows the total to be paid by or for the borrower $82,700.

CASH AT SETTLEMENT FROM/TO BORROWER

Section 300 reflects the difference between the gross amount due from the borrower and the total amount paid by/for the borrower.

Generally, line 303 will show the amount of cash the borrower must bring to settlement (Closing).

300. CASH AT SETTLEMENT FROM/TO BORROWER
301. Gross Amount due from borrower (line 120) 104,065.00
302. Less amounts paid by/for borrower (line 220) (82,700.00)
303. CASH (x FROM) ( _ TO) BORROWER 21,365.00

In this example, the borrower must bring $21,365.00 to settlement (Closing).

At settlement (closing) it is usually necessary to make an adjustment between the buyer and the seller for property taxes and other expenses.

The adjustments between the buyer and the seller are shown in Sections J and K of the HUD-1 Settlement Statement.

Adjustments to Costs Shared by Buyer and Seller

In the example given, the taxes, which are payable annually, had not yet been paid when the settlement occurs on July 1.

The borrower will have to pay a whole year's taxes on the following December 1.

However, the seller lived in the house for the first six months of the year.

Thus, one half of the year's taxes are to be paid by the seller.

Accordingly, lines 211 and 511 on the HUD-1 Settlement Statement would read as follows:

 

Buyer Side
211. County taxes 1/1/97 to 6/30/97 $600.00
Seller Side
511. County taxes 1/1/97 to 6/30/97 $600.00

 

The borrower is given credit for this amount at the settlement and the seller will pay this amount or count it as a deduction from sums payable to the seller.

Similar adjustments are made for homeowner association dues, special assessments, and other utilities, although the billing periods for these may not always be on an annual basis.

Be sure to work out these cost sharing arrangements or "prorations" with the seller before the settlement.

You may wish to notify the utility companies of the change in ownership and ask for a special reading on the day of settlement, with the bill for pre-settlement charges to be mailed to the seller at his or her new address or to the settlement agent.

This will eliminate much confusion that can result if you are billed for utilities used when the seller owned the property.

Contact us today, and let us know how we can help make your first time home buying the easiest possible.

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Panama City Beach Realty Group
Counts Real Estate Group, Inc.
3009 Highway 77, Suite H
Panama City, Florida 32405
Direct: 850.774.6582
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