Question:

What is included in the HUD guide to settlement costs?

Answer:

The HUD guide to settlement costs includes the following information on how to buy and finance a home.

  1. Getting a real estate broker. The HUD booklet to mortgage loan settlement costs and procedures explains how to deal with a real estate broker, given that they could be signed by the seller.
  2. Attorneys acting as closing/escrow agents. According to the HUD guide to home loan settlement, it is recommended that you make sure an attorney examines the Agreement of Sale before you sign it, or even after you did.
  3. Agreement of Sale contains items other than the house price that are important, too.
    • Is title free and clear?
    • Is your deposit refundable if you are unable to find affordable mortgage financing?
    • Pest inspection;
    • Home inspection - the condition of the electrical, plumbing, heating and other systems should be reported;
    • Are there any lead hazards - for homes built before 1978?
    • Seller/buyer shared expenses on utility bills arrangement;
    • How are settlement costs going to be paid by seller and buyer?
  4. The HUD pamphlet will provide information on how to shop for a loan - mortgage broker companies, government sponsored mortgage programs, explanation of fixed and adjustable loans, etc.
  5. Rate locks, taxes, and settlement fees are also included.
  6. Settlement and title services.
  7. RESPA disclosures - good faith estimate (GFE), HUD-1 settlement, etc.
  8. Credit report, appraisal and approval/denial of loan.

Specific settlement costs and a sample of the HUD-1 Settlement Statement will also be included in the HUD guide to mortgage settlement costs.

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