As a buyer of real property, you may be surprised at how much paperwork must be signed at a Florida real estate closing. In the past, the closing documents for residential real estate often included a HUD-1 settlement statement, which has since been replaced for most transactions with two newer documents. If you have questions about your closing statement or HUD-1 when buying real estate, you should consult the experienced Ocala real estate attorneys of the Dean Firm.
HUD-1 Settlement StatementThe HUD-1 Settlement Statement is a standard government form that was presented to borrowers who had applied for federally insured mortgages on or before October 3, 2015. Mandated by the Real Estate Settlement Procedures Act (RESPA), the HUD-1 itemized adjustments (such as tax charges, assessments and settlement fees) to the amount due from the borrower or due to the seller in a real estate transaction. The HUD-1 was provided along with the Truth in Lending Act (TILA) Disclosure Statement and the Good Faith Estimate.
While the HUD-1 has been discontinued for ordinary mortgage applications, it continues to be used in reverse mortgages, which allows those who are 62 and older borrow against the equity in their home without having to make monthly mortgage payments. Additionally, a lender may ask for an old HUD-1 settlement statement as proof a property closed during a certain period after a short sale before 2015.
The TILA-RESPA Integrated Disclosure (TRID) rules changed the processing of ordinary mortgages by combining the forms required by TILA and RESPA into two separate disclosures. Beginning after October 2015, borrowers of most closed-end consumer mortgages receive a Loan Estimate and a Closing Disclosure instead of a HUD-1 closing statement.
Loan EstimateThe Loan Estimate discloses the loan terms, projected payments, and closing costs of a mortgage loan. A lender provides this statement prior to closing and less than three business days after you have applied for a loan so that you can compare estimates from different lenders. You will find your estimated total monthly payments, estimated costs to close, and any prepayment penalties on the document. A skilled real estate lawyer can help you review and understand the terms contained in this document.
Closing DisclosureThree days before closing, your lender must provide you with a five-page Closing Disclosure. This form allows you to compare your final terms and costs to what was set forth in the original Loan Estimate. It should allow you to identify information critical to the decision to take on the loan such as the loan closing costs, monthly payments and interest rates. The document will itemize the transaction expenses, including all the credits and debits of the transaction and reconcile the money that’s going to change hands between the seller, buyer and third-party vendors.
Consult a Dedicated Real Estate Attorney in OcalaAt an Ocala mortgage closing, the title company will present a collection of documents that need to be signed. If the rates or fees changed between the Loan Estimate and the Closing Disclosure, you are not satisfied with the terms of the loan, or have other legal questions about the closing statement or HUD-1, you should discuss your situation with a seasoned real estate attorney. At the Dean Law Firm, Michael E. Dean and Timothy S. Dean possess decades of experience representing buyers and sellers in real estate closings. Call us at (352) 387-8700 to set up a free consultation or contact us online.