Not paying careful attention to what goes on at the closing table has cost me time and money a few times when I wanted to
sell my house quickly. And it’s happened to many other buyers and sellers over the years, too. The first time you participate in a real estate closing you learn that it’s a complicated legal “dance,” not just between the buyer and the seller; there’s actually a “chorus line” of many participants most real estate transactions, for example: home inspectors, bankers, mortgage brokers, termite inspectors, real estate brokers, outstanding lien holders, county taxing authorities, contractors and structural engineers. Deductions from the monies paid to out at closing to any of the above as well as the title company and various lawyers hired to conduct the transaction for the buyer and the seller as well. A lot of people are out there on the dance floor at closing time!
To keep things straight for everyone, since the closing dance involves so many people getting paid on behalf of the buyer and the lender as well as the seller, the HUD-1 form lists what each party is required to pay and what both are entitled to receive. This form is the result of legislation in the 1970s creating an obligation for full disclosure in many real estate transactions. It’s called the
HUD-1 Statement, and the 2010 updated version of it is commonly used today. A couple days prior to closing, buyers and sellers are supposed to receive a preliminary HUD-1 Statement in order to review it and catch any errors, as well as get themselves prepared for closing. But some people have regretted being in such a hurry (and this includes me) if they waited until they were seated at the closing table to look over their HUD-1 statement for the first time. Personally, I have learned my lesson! I make sure to take a close look at my HUD-1 form every time, and especially if I sell my house quickly. I never sign closing documents until I’m certain that the HUD-1 form is correct.
Certain specific dollar amounts that change daily, such as mortgage payoff, property taxes and escrow balances have to be reviewed again if I look at a preliminary HUD-1. Sitting at the closing table with other people who are usually talking is not the time to be reviewing the statement for the first time. I encourage you ask your broker, your lawyer or your title company representative to explain the HUD-1 before closing so there will be no surprises. That’s how you can learn all the right steps before you show up for the big dance!