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MORTGAGE GLOSSARY AND THE HUD 1 AND THE HUD 1 EXPLAINED

Click HUD 1 to view (and/or print) the HUD 1 Statement.

Click HUD 1 EXPLAINED to view (and/or print) an explanation of the HUD 1.
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HUD 1

HUD 1, EXPLAINED

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MORTGAGE GLOSSARY

Closing
Closing is the process in which a neutral third party holds documents (Deeds, Deeds of Trust, etc.) and monies related to a real estate transaction. It is closing's duty to see the documents are recorded properly and the money is disbursed to the appropriate parties.

Closing Instructions
Known in some regions as "escrow instructions," these are the specific terms of the closing that must be met before the conclusion of closing. They are drafted from the provisions agreed upon in the purchase agreements by the parties involved in the transaction. The closing officer will conduct the closing in accordance with the instructions and will provide a written closing statement of all the charges and credits for all parties involved.

Closing Agent/Officer
A closing agent, known in some areas as an "escrow officer," oversees the closing, the process that some states use to complete a home's sale or purchase. The buyer and seller sign an agreement that gives the closing agent a detailed list of instructions on how the closing should be carried out, which includes how much money to collect, what documents to prepare and when to order a title search. The closing agent is a neutral party who fairly represents both the seller and buyer. The closing agent can be a lender, title company or real estate attorney.

Closing Costs
The closings costs for the buyer and seller may include title searches, government taxes, notary fees, loan fees, escrow fees, recording fees, re-conveyance fees, prorations, hazard insurance and sales commissions.

Conveyance
A conveyance is any document that transfers the title (ownership of property) from one party to another. A typical example of a conveyance is a Grant Deed, which can be used in most circumstances. However, there are other documents, such as the Inter Spousal Transfer Deed or the Quit Claim Deed, which are used in specific cases only. Conveyances vary from state to state in form and content.

Escrow
Escrow, referred to as "closing" or "settlement" in some regions, is the process in which a neutral third party holds documents (Deeds, Deeds of Trust, etc.) and monies related to a real estate transaction. It is escrow's duty to see the documents are recorded properly and the money is disbursed to the appropriate parties.

Escrow Instructions
Known in some regions as "closing instructions," these are the specific terms of the closing that must be met before the close of escrow. They are drafted from the provisions agreed upon in the purchase agreements by the parties involved in the transaction. The escrow officer will conduct the closing in accordance with the instructions and will provide a written closing statement of all the charges and credits for all parties involved.

Escrow Agent/Officer
An escrow agent, known in some regions as a closing agent, oversees escrow, the process that some states use to complete a home's sale or purchase. The buyer and seller sign an agreement that gives the escrow agent a detailed list of instructions on how escrow should be carried out, which includes how much money to collect, what documents to prepare and when to order a title search. The escrow agent is a neutral party who fairly represents both the seller and buyer. The escrow agent can be a lender, title company or real estate attorney.

Good Faith Estimate
The lender will estimate the total costs to get a loan when buying or refinancing a home. The costs will include lender and broker fees, loan-related fees, and third-party fees, such as the title insurance and appraisal. Most of these fees must be paid on the closing date, the day when the sale or purchase of a home is completed.

Holding Title
There are several different ways to hold or vest title to a property and each has a unique purpose. Joint Tenancy is a form of co-ownership by two or more persons, each with equal shares along with the right of survivorship upon the death of a co-owner. Tenancy in Common is the form of co-ownership of two or more persons in undivided interests. The percentages can be unequal and each owner can convey (sell, trade) their interests in whole or in part. Community Property is the form of co-ownership specific to married persons in several states. Both husband and wife have equal right and interest to the property during the marriage, however the survivorship rights upon the death of a spouse may vary from state to state. Sole and Separate Property is typically the way of one spouse holding title to property separate from the other without the non-title spouse having any inherent interest or claim to the property. There are other ways to hold title and you should always seek the advice of an attorney and tax professional prior to choosing a vesting as there can be potential tax and legal ramifications connected with each.

Home Owner's or Hazard Insurance
Home owner's insurance policy protects home owners against theft and property damage. Lenders require that owners buy a hazard insurance policy when they buy a home. Buyers and owners, though, often opt for the extended policy called home owner's insurance. This policy protects the owner not only against property damage caused by a fire or a severe rainstorm, but can also shield owners against theft, vandalism, as well as for stolen cash and personal items. Home owner's insurance can extend to personal liability, which covers any damage that owner might cause someone.

HUD-1 Settlement Statement
The settlement sheet itemizes the services provided and lists the charges to the buyer and the seller. It is filled out by the closing officer, and must be signed by both the buyer and the seller.

Recording/Public Records
Most documents i.e. Deeds, Deeds of Trust, Liens and Court Orders are recorded with the County Recorder's Office. This is to notify the public that there has been a change to the status of a property, either as to the ownership or as to the liens and encumbrances (loans) placed against the property.

Title
To have title to a property means to have the right to own it. Sometimes title can refer to the documents, such as a deed, which states who own a property. Title documents are on public record at the county courthouse. See Holding Title for more information on how to hold a title.

Title Insurance
Title insurance guarantees that the seller has legal and "marketable" title to the property which he or she is selling. Title insurance may be issued for both the buyer and for the lender, if there is one. The lender's policy will protect the lender for any defects in the title up to the amount of the loan. The buyer's or owner's policy will protect the new buyer against any flaws in the title. The policy will be good as long as the buyer owns the property. It covers events or circumstances that happened in the past, before the buyer took title to the property.

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