The HUD 1 Settlement Statement (also known as a Closing Statement) is the document you sign when you close on a mortgage. Unlike the application, the HUD1 is final so all the terms, costs, etc. will not change.

The Good Faith Estimate is one of the documents you get at application and is supposed to be the initial estimate of what will be on the final HUD 1.

HUD 1 Definition

The HUD1 is a document required by RESPA (Real Estate Settlement and Procedures Act, the controlling Federal law) to show actual charges and adjustments for all parties including the seller, buyer, agents, lenders, and all third parties like originators.

Another name for the HUD1 is the HUD 1 closing statement or settlement statement. Most people in the mortgage industry just call it the “HUD”. But that can be confusing for some borrowers.

When you hear “HUD” you might think that means some HUD home or special HUD financing. It’s just the industry lingo for the closing statement. It has nothing to do with what kind of mortgage you get or what kind of house you buy. Its job is to break out all the money in the transaction and show who paid what and who collected what.

HUD 1 Closing

A HUD1 is signed by the buyer, seller, and closing agent at closing. For a refinance, only the borrower and closing agent sign the HUD1.

There may also be a HUD 1 addendum with additional charges or payoffs not on the first or second page. For an FHA closing, a HUD 1 addendum states that if the closing agent has any information that the borrower’s contribution is anything other than their own the closing agent will not disperse the funds until they get instructions from the lender.

Unfortunately, some originators use the Good Faith Estimate as a selling vehicle. The lower their costs and rate the better chance they have to get you to say yes. Some borrowers don’t see the real charges until the final HUD1 at closing and by then it is too late.

Along with many of the other costs, the HUD 1 taxes and insurance can also be disclosed on the Good Faith Estimate incorrectly. Since they are a part of the transaction, the originator may leave out the full escrow amount which makes the estimate look much better. But then you show up to closing with hundreds or thousands more required for taxes and insurance.


You are going to have a tough time changing the HUD1 at closing so take advantage of the law.

Federal law allows for the HUD-1 to prepared for review 24 hours in advance of the closing.

But only if the borrowers request it.

Definitely request it. This can guard against any panic at the closing table when you see something you were not expecting.

Many times a refinance HUD 1 is not prepared until the day of signing sometimes even hours or minutes before signing. Put the loan officer on alert early in the process that you want a HUD1 closing statement 24 hours in advance.

The real estate agents on a purchase transaction are usually on the title company and loan officers case to get a copy of the HUD1 early so it may already be ready in advance but you have to ask for your copy too.

You can request it from your loan officer or the title company.

Keep your estimate from application and sit down to compare the estimate to the final HUD1. And speaking of keeping things.

Always keep your HUD 1 closing statement from every mortgage you get. It is a controlling document and always good to keep for future transactions.

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