III. Your Settlement
Costs
B. Calculating the Amount You Need At Settlement
The first page of the HUD-1 Settlement Statement summarizes
all the costs and adjustments for the borrower and seller.
Section J is the summary of the borrower’s transaction
and Section K is the summary of the seller’s side
of the transaction. You may receive a copy of the seller’s
side, but it is not required.
Section 100 summarizes the borrower’s costs, such
as the contract cost of the house, any personal property
being purchased, and the total settlement charges owed
by the borrower from Section L.
Beginning at line 106, adjustments are made for items
(such as taxes, assessments, fuel) that the seller has
previously paid. If you will benefit from these items
after settlement, you will usually repay the seller for
that portion of the cost.
Here is an example for you to use in making your own calculations:
| J.
SUMMARY OF BORROWER'S TRANSACTION |
| 100. GROSS AMOUNT
DUE FROM BORROWER: |
| 101. Contract sales
price |
100,000.00 |
| 102. Personal Property |
|
| 103. Settlement charges to
borrower (line 1400) |
4,000.00 |
| 104. |
|
| 105. |
|
| Adjustments
for items paid by seller in advance |
| 106. City/town taxes to |
|
| 107. County taxes to |
|
| 108. Assessments 6/30 to 7/31
(owners assn.) |
40.00 |
| 109. Fuel Oil 25 gals. @ $1.00/gal. |
25.00 |
| 110. |
|
| 111. |
|
| 112. |
|
| 120. GROSS AMOUNT DUE FROM
BORROWER |
104,065.00 |
|
Assume in this example, the cost of the house
is $100,000 and the borrower’s total settlement
charges brought from Line 1400 of Section L are $4,000.
Assume that the settlement date is July 1. Here the borrower
has agreed to pay the seller for the $40 Home Owners Association
dues that have been paid for the month of July and for
the 25 gallons of fuel oil left in the tank. This is added
for a gross amount due from the borrower of $104,065.
Section 200 lists the amount paid by the borrower or on
behalf of the borrower. This will include the deposit
of earnest money you put down with the agreement of sale,
the loan(s) you are getting and any loan you may be assuming.
Beginning at Line 210, adjustments are made for items
that the seller owes (such as taxes, assessments) but
for which you as the borrower will pay after settlement.
The seller will usually pay you or credit you 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 this example, assume the borrower paid
an earnest deposit of $2,000 and is getting a loan for
$80,000. 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 220 shows
the total $82,700 to be paid by or for the 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.
| 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.
