Understanding Your Hud-1 Settlement Statement: Fill & Download for Free

Thanks for the A2A. Let’s see if we can get an understanding of the situation:Three siblings inherit an home with a fair market value of $260,000. Can we further assume that the home was “free and clear”, which means no outstanding mortgage or liens? If so, each of you holds an equal equity stake of $86,667.So, the purchaser needs to provide the surviving siblings with $86,667 each to purchase the home from the estate. It seems to me that if the purchaser could cover the transaction with $173,334 in cash, then you and your siblings could work with the executor of the estate on a Maryland Quit Claim Deed, whereby the ownership would be transferred in the most economical manner.Yet, even in a Quit Claim situation, there will be costs like property taxes that need to be ratably divided among the siblings at time of transfer or closing. Now, that the purchaser wishes to buy the property using mortgage financing adds additional closing costs as the lender must view this an Arms Length Transaction. The added costs will be irritating things like appraisal, loan origination and processing fees.Note: As part of new rules established by the CFPB effective October 3, 2015, the HUD-1 Settlement Statement became obsolete. It has been replaced by a document called the Closing Disclosure that consolidates the HUD-1, Good Faith Estimate, and Truth in Lending Act disclosures.See: http://files.consumerfinance.gov/f/201311_cfpb_kbyo_closing-disclosure.pdfShould these costs be divided among the siblings? I don’t have any view into that calculus.

Here's a step-by-step guide for getting a mortgage, from figuring out affordability to the closing, the MortgageHippo way:1 Determine how much home you can qualify for and how much home you can afford (they're not the same thing): Before you even waste time looking at homes, find out how much loan you can qualify for. Your mortgage professional can guide you through this analysis. It helps to have the following information handy (for you and your co-borrower, if applicable): income, monthly debts, your assets (to cover down payment and closing costs) and credit score.Unlike determining how much you qualify for – which is based on objective mortgage guidelines and financial ratios – figuring out how much you can afford requires a thorough examination of your situation. What kind of lifestyle do you lead? Do you like to travel and dine out often or are you more of a homebody? Only you know what your monthly expenses really are (above and beyond what shows up on your credit report) and how much you can afford to pay monthly for your new home.2 Get pre-approved: No home seller will consider you a serious buyer if you're not pre-approved. In fact, most real estate agents won't begin working with you if you're not already pre-approved. A serious pre-approval involves an in-depth self-assessment of your financial situation and a thorough conversation with a mortgage professional to discuss your options. The following things are typically needed from you at this point:Pay stubs, W-2s, tax returns and bank statements to verify your income and assets (some of these depend on whether you're an employee or self-employed)Permission for your mortgage professional to pull your credit and verify your credit score and debts.3 Find a home: With your pre-approval in hand, you are now ready to get out there, find your dream home, and successfully negotiate a purchase offer. We recommend working with a good real estate agent who will not only help you identify a property but will also work with you to structure the purchase offer and negotiate a solid purchase contract. As soon as you have a purchase contract signed and agreed by all parties, you should send it to your mortgage professional. Having a purchase contract in place is the trigger that allows you to start the mortgage application process.4 Submit your initial application to the lender: In addition to the fully executed purchase contract, most lenders will require the following documents before giving you a preliminary approval: * 1003 Mortgage Application: Our recommendation is to work on your 1003 application while you're looking for a home (during step #3). That way it's ready to be submitted once you identify your property and update the application with the property information required.Signed initial disclosure package: Your mortgage professional is responsible for providing you multiple disclosures required by law – both federal and state-specific. Some examples of these disclosures are the Good Faith Estimate and the Truth-in-Lending Statement.Complete set of documents verifying your income, assets and overall health of your finances: Those documents include but are not limited to: pay stubs, W2s, tax returns, and account statements.5 Allow the lender to process your loan: With the initial application packet submitted, the lender can start working on your loan, verifying all of the information provided in the application, ordering the appraisal and property title report. That work is done by a processor, and once he or she feels they have a solid file, it is sent to the underwriter for review. Sit back, relax, and don't forget to go grocery shopping. Your loan should be conditionally approved soon.6 Clear conditions to close: "Conditions to close" are requirements the underwriter places on your loan application before giving it its final stamp of approval. Not to fret -- this is typical of all mortgage applications. At this point, the process becomes very specific to each borrower; the lender will ask for documents relevant only to your personal circumstances.For example, if you've been divorced, the lender will probably ask for a divorce decree. Other requests we typically see at this point are the following:Letters of explanation: If, for example, you've had a large deposit in your bank account recently, the lender will want an explanation for that deposit (i.e. where it came from and what it was for).Information about other financed propertiesA clarification regarding items on the credit reportKeep in mind that a lot of these documents can and should be obtained at the point of loan application and submitted to the underwriter in anticipation of being needed. An experienced mortgage professional and a good processor should work together on identifying those items upfront so that the process later on is a lot smoother.7 Closing: Get your signature hand ready because you'll be doing a lot of signing, but make sure you understand what it is that you're signing. Don't let the process overwhelm you and definitely don't let anyone rush you or pressure you into signing something with which you don't feel comfortable. The lawyer or agent conducting the closing should carefully explain everything to you. And if you have your own lawyer, even better. You may even request copies of the documents you'll be signing before the closing so you and your lawyer (if you have one) have time to carefully review them beforehand.These are some of the documents you can expect to sign at closing:The deed – transfers the property from the seller to the buyer and determines the form of ownership in which you take title (e.g. individually, joint tenants in common, in trust, etc.).The bill of sale – transfers the personal property being sold with the house, such as the HVAC unit or security systems.The HUD-1 – settlement statement that shows all the money transfers at closing.The note – evidences your debt to the lender and states the details of the loan (interest rate, repayment term, etc.)The mortgage – states the terms of the lender's interest in your property (since the property is collateral for the loan), including, for example, the lender's right to foreclose upon the property if you don't make your loan payments.8 Move into your new home: You're at the homestretch now! If at all possible, hire professional movers, and that doesn't include friends (unless you're willing to sacrifice some valuable friendships). Remember to change your address with the post office and other important service providers such as banks, credit cards, and, of course, Netflix. Enjoy your new home!

1. Determine how much home you can qualify for and how much home you can afford (they're not the same thing): Before you even waste time looking at homes, find out how much loan you can qualify for. Your mortgage professional can guide you through this analysis. It helps to have the following information handy (for you and your co-borrower, if applicable): income, monthly debts, your assets (to cover down payment and closing costs) and credit score.Unlike determining how much you qualify for – which is based on objective mortgage guidelines and financial ratios – figuring out how much you can afford requires a thorough examination of your situation. What kind of lifestyle do you lead? Do you like to travel and dine out often or are you more of a homebody? Only you knows what your monthly expenses really are (above and beyond what shows up on your credit report) and how much you can afford to pay monthly for your new home.2. Get pre-approved: No home seller will consider you a serious buyer if you're not pre-approved. In fact, most real estate agents will not even start working with you if you're not pre-approved. A serious pre-approval involves an in-depth self-assessment of your financial situation and a thorough conversation with a mortgage professional to discuss your options. The following things are typically needed from you at this point:Pay stubs, W-2s, tax returns and bank statements to verify your income and assets (some of these depend on whether you're an employee or self-employed)Permission for your mortgage professional to pull your credit and verify your credit score and debts.3. Find a home: With your pre-approval in hand, you are now ready to get out there, find your dream home and successfully negotiate a purchase offer. We recommend working with a good real estate agent who will not only help you identify a property but will also work with you to structure the purchase offer and negotiate a solid purchase contract.As soon as you have a purchase contract signed and agreed by all parties, you should send it to your mortgage professional. Having a purchase contract in place is the trigger that allows you to start the mortgage application process.4. Submit your initial application to the lender: In addition to the fully executed purchase contract, most lenders will require the following documents before giving you a preliminary approval:1003 Mortgage Application: Our recommendation is to work on your 1003 application while you're looking for a home (during stage #3). That way it's ready to be submitted once you identify your property and update the application with the property information required.Signed initial disclosure package: Your mortgage professional is responsible for providing you multiple disclosures required by law -- both federal and state-specific. Some examples of these disclosures are the Good Faith Estimate and the Truth-in-Lending Statement.Complete set of documents verifying your income, assets and overall health of your finances: Those documents include but are not limited to: pay stubs, W2s, tax returns, and account statements.5. Allow the lender to process your loan: With the initial application packet submitted, the lender can start working on your loan, verifying all of the information provided in the application, ordering the appraisal and property title report. That work is done by a processor, and once he or she feels they have a solid file, it is sent to the underwriter for review. Sit back, relax, and don't forget to go grocery shopping. Your loan should be conditionally approved soon.6. Clear conditions to close: "Conditions to close" are requirements the underwriter places on your loan application before giving it its final stamp of approval. Not to fret -- this is typical of all mortgage applications. At this point, the process becomes very specific to each borrower; the lender will ask for documents relevant only to your personal circumstances. For example, if you've been divorced, the lender will probably ask for a divorce decree. Other requests we typically see at this point are the following:Letters of explanation: If, for example, you've had a large deposit in your bank account recently, the lender will want an explanation for that deposit (i.e. where it came from and what it was for).Information about other financed propertiesA clarification regarding items on the credit reportKeep in mind that a lot of these documents can and should be obtained at the point of loan application and submitted to the underwriter in anticipation of being needed. An experienced mortgage professional and a good processor should work together on identifying those items upfront so that the process later on is a lot smoother.7. Closing: Get your signature hand ready because you'll be doing a lot of signing, but make sure you understand what it is that you're signing. Don't let the process overwhelm you and definitely don't let anyone rush you or pressure you into signing something with which you don't feel comfortable. The lawyer or agent conducting the closing should carefully explain everything to you. And if you have your own lawyer, even better. You may even request copies of the documents you'll be signing before the closing so you and your lawyer (if you have one) have time to carefully review them beforehand.These are some of the documents you can expect to sign at closing:The Deed – transfers the property from the seller to the buyer and determines the form of ownership in which you take title (e.g. individually, joint tenants in common, in trust, etc.).The Bill of Sale – transfers the personal property being sold with the house, such as the HVAC unit or security systems.The HUD-1 – settlement statement that shows all the money transfers at closing.The Note – evidences your debt to the lender and states the details of the loan (interest rate, repayment term, etc.)The Mortgage – states the terms of the lender's interest in your property (since the property is collateral for the loan), including, for example, the lender's right to foreclose upon the property if you don't make your loan payments.8. Move into your new home: You're at the homestretch now! If at all possible, hire professional movers, and that doesn't include friends (unless you're willing to sacrifice some valuable friendships). Remember to change your address with the post office and other important service providers such as banks, credit cards, and, of course, Netflix. Enjoy your new home!