Tag Archives: hud 1

Understanding The HUD-1 Form, Part 2

In our first entry in this series we look at the header, sections A through I. Now let’s move on to sections J and K on the HUD settlement statement form, which break down the borrower’s and seller’s transactions respectively. We are going to talk about these sections together because they are so closely interrelated.

If you are using Easy HUD, our HUD settlement statement software, then you will see some of the boxes here are red and some are blue. Both boxes are calculated automatically by the software as you enter values. The difference is that the values in blue boxes can be changed while the red boxes cannot.

Line 101 (Contract sales price) is the amount from the Agreement of Sale. This value is automatically carried over to line 401 in the seller column. It is also used to compute other values on the form such as broker fees (Section 700) and government charges (Section 1200). These will be covered in a future article.

Line 103 (Settlement Charges to Borr) may be a bit confusing because this value is calculated from information entered later in the HUD-1 form. This value comes from line 1400 (Total Settlement Charges), which in turn is the sum of all charges entered on page 2 of the form.

Values entered in lines 102 and 106-112 for the buyer will automatically be copied over to the corresponding seller lines, 402 and 406-412. The seller values can be changed if for some reason these monies should not go directly to the seller.

After the numbers in sections 100 and 400 have been entered, the HUD software automatically calculates lines 120 (Gross Amount Due From Borrower) and 420 (Gross Amount Due To Seller).

The amount due from the borrower is adjusted by section 200 (Amounts Paid By Or In Behalf of Borrower), including the down payment (line 201), mortgage loan (line 202) or any taxes or assessment fees that will not be paid by the borrower. The values are totaled in line 220 and the difference between line 120 and line 220 is calculated in line 303 (Cash From Borrower).

Section 500 on the HUD 1 provides similar function for the seller side of things. Any money that will not be going directly to the seller, such as funds going to pay off existing mortgages, are listed here. They are summed in line 520 (Total Reduction Amount Due Seller) and then line 520 is subtracted from line 120 to give the amount due the seller in line 603 (Cash To Seller).

These calculations are tedious and prone to error if done by hand. The convoluted structure of the form requires agents to go back and forth from one page to another, which complicates the issue further. Download a demo of Easy HUD from our list of attorney practice management software and see for yourself how much easier real estate transactions can be.

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Understanding The HUD-1 Form, Part 1

Let’s look at this form used in all home sales and refinances. You know most of this already, but maybe we can offer a few tips. Today we examine the header of the HUD settlement statement form, sections A through I.

Section A – You know it’s a government form when there is an entire section dedicated to the title. Thank you, U.S. Department of Housing and Urban Development, for setting aside a section to say “Settlement Statement (HUD-1)”. Truer words were never spoken. Let’s move on.

Section B – Indicate the loan type and complete the appropriate fields such as File Number, Loan Number or Mortgage Insurance Case Number. Change the Status to the correct value if this isn’t the final version. “Created By” is for internal office use and will not be printed on the form.

Section C – This section explains the purpose of the form so has no entry fields. You won’t see it in our HUD settlement statement software until you print out the final form.

Section D – Fill in the name and full mailing address of the borrower. If you are using our software click on the address book icon in the upper right corner, select the borrower’s name from the contact list and the details will be filled in. If there is more than one borrower, click on “More…” to enter up to eight names.

Section E – Enter the name and full mailing address of the seller, using the same options you had in Section D. Provide the Tax ID Number (TIN) to be used on the 1099-S.

Section F – Complete this section with the name and full mailing address of the lender. As with sections C and D you can use the address book to pull the information from your contact list. This can be left blank if it is a cash sale.

Section G – Give the street address of the property. Since this is often the mailing address of the seller, or the borrower in the event of refinance, you can select the appropriate party and then click Copy to pull the information in automatically. If there is no street address, enter a brief legal description of the property. Also enter theLot # and/or Block # if appropriate.

Section H – The settlement agent’s name and mailing address will automatically be pulled from the software’s Default Settings, although you can change it if you wish. Also enter the address of the Place of Settlement.

Section I – Enter the Settlement Date. The HUD-1 software will automatically copy the date to the Funding Date, though you can change that if desired. The Funding Date carries over to line 901, covered in a future entry.

Follow along this and future articles with your own copy of Easy HUD, or download a demo from our selection of law practice management software if you haven’t purchased the application yet.

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The Most Important Tool For New Real Estate Agents

Real estate can be a lucrative career. It is a particularly attractive pursuit for people trying to balance career and family since the job typically allows more flexibility than a traditional job. However as new agents quickly discover, real estate transactions are a bit more complicated than buying a cup of coffee. Many new professionals quiver in fear at the thought of the dreaded HUD 1.

This form needs to be filled out for every real estate sale. The agent needs to complete dozens of fields to document every aspect of the transaction including title fees, mortgage insurance and taxes. The taxes are calculated from multi tiered tax tables that can vary based on type of transaction, length of mortgage or location within a state. Agents find themselves pining for the simplicity of their yearly income tax returns when they are faced with a HUD settlement statement form.

But all is not lost. This is not your parents’ real estate market. Today’s real estate professionals have access to HUD settlement statement software such as our product, EasyHUD. Using a real estate application allows even inexperienced agents to complete the forms with confidence. Our software is easy to use with an intuitive interface, lots of online help, and Easy Soft’s library of training videos.

The software offers more than help with the closing statement. Agents also have access to a library of professional-looking real estate forms that can be customized to each business’s unique needs. If you don’t see a form you need, you can add your own. All documentation needed for a real estate transaction is right at your fingertips.

The software is a great way to ease new agents into the business, but it is also a valuable tool for professionals with hundreds of transactions on record. The software automatically copies information from the case file to the HUD 1 forms or other documents. It takes care of the math. It even includes a spell checker to protect you from embarrassing typos.

Over 15,000 clients enjoy using Easy Soft’s line of real estate products and legal practice management software. Try Easy HUD risk-free for 30 days and if you don’t agree it’s the most important tool for both new and veteran real estate professionals, then you can return it for a full refund.

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Real Estate Transactions: Don’t Work Without A Net (Mortgage)

Real estate transactions are not simply money going from the buyer to the seller. A host of payments must be made to other parties including government agencies, insurance companies, home inspectors…oh and you too. You need to not only keep track of all these charges that come off the HUD 1 but must also determine if the fees have already been paid as part of the mortgage, or will be paid separately by checks you need to mail out. Our HUD settlement statement software takes the tedium and guesswork out of this disbursement process so you stop worrying about making sure everyone gets paid.

When you fill out the HUD 1 forms with our software, you’ll notice that a number of the lines include a check box labeled Net. As you enter numbers into the form, you can mark any of these boxes to indicate the fee has been netted. That means the fee is rolled up into the gross mortgage and has already been disbursed.

Several of the boxes are automatically checked on the HUD-1 form to reflect fees that are commonly included in mortgages. These include origination charges, items required to be paid in advance by the lender, and initial escrow deposits made with the lender. Any of these can be unchecked if for some reason they were not included in the mortgage. Any prepaid fee marked with a Net box on the HUD forms can be checked and the software will adjust the net mortgage accordingly.

To see the result of the net fees, either press Ctrl-L or click “Tools > Lender Worksheet” in the menu at the top of the screen. Either of these commands brings up the Lender Worksheet. This lists the gross mortgage amount, all items added or deducted by the lender as indicated by the checked Net boxes, and the net mortgage amount. All values are taken from the HUD 1 and the calculations are performed by the software so you now the final net mortgage value is accurate.

What about items not netted? Those are handled by the ledger module, which we’ll explore in another entry.

The advantage of using HUD software like Easy HUD is that you have to enter the information only one time. Values are automatically copied to other locations such as the Lender Worksheet and the software takes care of the calculations more quickly and accurately than would be possible with manual calculation.

Accuracy is critical in real estate closing process and you can’t afford to make even innocent mistakes. Don’t trust your HUD-1 form to error-prone manual completion or to software not dedicated to the real estate market. Trust Easy Soft products to do the work quickly, efficiently and accurately.

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Is Tax Calculation Too Taxing? We Have The Answer

Nothing is certain but death and taxes. We can probably avoid one of those during real estate transactions, but we still have to deal with property transfer taxes. Even the best legal software can’t actually eliminate taxes, but at least we can make them a little more convenient to calculate on the HUD-1 form.

EasyHUD allows the user to select a default jurisdiction under “Tools > Default Settings”. We include most jurisdictions throughout the country, but if you happen to live in one not listed please contact us and we will add it to the software as soon as possible. After choosing a default jurisdiction, all new HUD forms generated will automatically use that jurisdiction.

But what if this particular sale doesn’t follow standard tax rates? Maybe it is in a city that has special transfer taxes or some strange exception to regular state rules. You can fix that by clicking on the HUD Page 2 tab and scrolling down to section 1200, “Government Recording And Transfer Charges”. Click the yellow button marked “Tax Tables” to pull up a dialog that allows you to enter additional tax information. When you are done click “OK” and the HUD 1 will automatically be updated.

Maybe you do most of your business in one area but occasionally make sales in a region with different tax rates. All you have to do is pick the new region from the dropdown menu next to the “Tax Tables” button. The software will use the new jurisdiction for that HUD-1 form only. You can even handle real estate transactions in multiple states with this one easy-to-use real estate application.

Once the correct jurisdiction has been selected, the correct tax values are automatically calculated and entered in the HUD forms. You no longer have to do tedious manual tax table searches, or try to calculate them manually using arcane government tax formulas.

Download a demo of EasyHUD or buy it and use it risk-free for 30 days. We think you’ll be pleasantly surprised at just how easy HUD 1 tax calculations are once you are using the best legal software you can find.

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Stop Wasting Time Fixing HUD Form Errors

You’ve just generated a stack of real estate documents including letters, invoices, government forms and more. You glance at the top sheet and realize *gasp* there is a mistake. You flip through and realize you’ve carried the mistake through to every document in the stack. You’ve now got the tedious missions of laboriously paging through all the documents and correcting them by hand.

It doesn’t even have to be an error. Maybe there has been some change to the agreement or modification to one of the many fees listed on the HUD 1 since the forms were printed. You still have to page through all the documents to find the information altered and make sloppy-looking manual corrections. Isn’t there an easier way?

Yes there is. When you use EasyHUD all of the case information is entered in one central location. If anything changes, all you have to do is make the change in the program and regenerate the HUD forms or any other documents. You get clean, professional-looking documents with a couple clicks of the mouse.

Imagine how much time you’ll save using legal software programs rather than correcting forms by hand! In the time it would take you to correct one form manually you can fix the information in the software and print a whole new set of documents. In any business, time is money. Time wasted on tedious administrative tasks is money down the drain.

This method is not only faster than manual corrections but is also safer. You can be sure the software has found every entry on the HUD-1 form that needs to be changed. There is no danger of overlooking a correction.

Our software includes other features that prevent you from making mistakes in the first place. The built-in spell checker and the automatic calculation of HUD 1 entries means you will catch most errors before they get a chance to be printed out.

If you are still filling out HUD forms in pen or if you are using fillable PDF or Word files rather than dedicated legal software programs then it’s time for you to join the rest of us in the 21st century. Simple HUD-1 form error correction is only one of the many features you’ll find in EasyHUD.

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