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.
|
