What is the HUD-1? And how do I read it?

Real Estate Broker/Owner with DROdio Real Estate, Inc

The HUD-1 is the document used at settlement to account for all the monies in a transaction. It's a federally mandated form, and it also happens to be a very hard document to read, so we're going to help you learn to read it.

The HUD-1 is usually a two-page form (often front & back). For the purposes of this discussion, we'll use this sample as the front of the HUD-1 (click on image to magnify):


And we'll use this sample as the back of the HUD-1 (again, click on image to magnify):


On both the front and back of the HUD-1, the left side is the "buyer's column" and the right side is the "seller's column". On the front of the HUD-1, on the left-hand buyer's side, you'll see a red box marked "A" on the top, and a green box marked "C" on the bottom. Box A is the sum of all the debits the purchaser is paying as a part of this transaction. We've circled a number in this box, in the amount of $23,298.38, which is the total of the settlement costs the buyer is paying to purchase the property. More on that later.

Box C shows all the credits the buyer is getting, including any loans being used to purchase the property (the loan is considered a credit in this instance because it keeps the buyer from having to use his own money). At the bottom of box C is any money still due "FROM" the buyer at settlement, or money due "TO" the buyer at settlement. In this example, $3,406.19 is being refunded "TO" the buyer at settlement. However, in most instances, the buyer will have to bring additional funds to settlement. When this happens, the funds must be in the form of a certified or cashier's check.

On the right-hand seller's side, box B shows credits being paid to the seller, and box D shows debits being deducted from the seller's proceeds. Below box D shows cash going "TO" or being collected "FROM" the seller. Usually the seller will have money being paid "TO" him, however in some instances (like when the seller can't sell the property for as much as he paid for it), the seller may be required to bring money to settlement.

On the back of the HUD-1, the left-hand side shows all the monies the buyer is paying in closing costs to purchase the property (box E). You'll see that in our example, this number totals $23,298.38 - and was carried over to box A in the front page on line 103, where it shows up in the buyer's debits section. So basically, page two is just showing, on a line-item basis, how that $23,298.38 in costs was calculated. The right-hand column on the back of the HUD-1 (box F) shows the monies the seller is paying to sell the property, and you can see that the seller's total costs, in this case $27,509.55, carry over to line 502 in box D.


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Erik Elsea
Erik Elsea-Jones & Co. Realty - Fort Myers, FL

Thank you for this post. I am forwarding this to my agents because they could definitely use a refresher. Great post!

May 22, 2008 04:26 AM #1
Sun City Grand Homes Surprise AZ Real Estate Leolinda Bowers Designated Broker Leolinda Realty
Leolinda Realty - Surprise, AZ
Sun City Grand in Surprise Arizona

It's like reading a balance sheet. Your blog information is clear and explicit.

May 22, 2008 04:28 AM #2
Lorinda Ward
Keffer Realty - Norfolk, VA
Serving, Hampton Roads Virginia. Norfolk, Chesapeake, Va Beach

Great article very, very informative.  Thank you for sharing your knowledge.

May 22, 2008 04:41 AM #3
Mike Davis
Keller Williams Realty, Augusta Partners - Evans, GA
Realtor, Selling Buying Homes Fort Gordon, Hephzibah, Augusta, Evans

thanks so much, the interactive HUD1 and your explanation helped me to understand who receives or pays what at closing...Thanks


Sep 14, 2008 12:43 AM #4
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