What purpose does the HUD-1 Settlement Statement serve?

The HUD-1 Settlement Statement plays a crucial role in the closing process of a real estate transaction. Its primary purpose is to provide a detailed breakdown of all fees and services that are charged to the borrower during the loan process. This document includes various costs associated with the purchase of the property, such as loan fees, title insurance, appraisal fees, and other related expenses.

By outlining these financial aspects, the HUD-1 enables both the buyer and the seller to have a clear understanding of the transaction's costs, ensuring transparency and helping prevent misunderstandings at closing. The itemization of these charges allows borrowers to see how their loan funds are allocated and to verify that they align with what was previously discussed and agreed upon.

In addition to its role in detailing costs, the HUD-1 Settlement Statement is an important tool in regulatory compliance, ensuring that lenders and settlement agents adhere to federal laws regarding disclosure to consumers. This improves trust in the lending process and contributes to a smoother transaction.