HUD-1 As A Marketing Tool – For Realtors

How Can HUD-1 Help You Generate Business?

—————————————–

HUD-1 is a regular shape you employ very incessantly. The shape serves now not simply as a agreement last remark, but in addition as an explanation of cost of various tax deductions. Understanding the shape and the tax deductible pieces and speaking them in your purchasers will assist your purchasers to reduce their taxes and let you to construct accept as true with and get extra industry publicity.

What is the HUD-1

—————–

HUD-1 is a kind utilized by the agreement agent (last agent) to itemize all incoming price range and all fees paid and amassed via a borrower and vendor for an actual property transaction.

When is the HUD-1 Issued?

The Real Estate Settlement Procedures Act (RESPA) calls for that the shape be issued in all actual property transactions within the United States which contain federally linked loan loans. RESPA states you must be given a duplicate of the HUD-1 no less than sooner or later previous to agreement.

When Do Clients Need HUD-1 For Taxes?

————————————-

Clients use the guidelines integrated within the shape after they document their annual taxes. The submitting time limit is most often April 15 of once a year for the continuing 12 months. To permit the customer sufficient time to document taxes the usage of the HUD-1 data, it is strongly recommended {that a} reproduction of the HUD-1 can be despatched to the customer in January.

Because the true property transaction takes position all through the 12 months, most often lengthy sooner than submitting the tax go back, the HUD-1 given to the customer at last time might be misplaced or misplace. Sending the customer a duplicate of the HUD-1 with a canopy letter can be very useful and time financial savings to the customer.

HUD-1 Client Sample Letter

————————–

The following is a pattern letter you’ll use to ship your purchasers:

[Date]

TAX TIME IS COMING

Dear [Client’s Name]:

Tax time certainly is simply across the nook, and the very first thing you’ll want is a duplicate of the Closing Statement in your belongings. Moving could be a very busy time, and you could have out of place this crucial file.

I wish to make sure you avail your self of all of the tax benefits conceivable from our transaction. If your accountant has any questions, please have her or him name me (if you wish to have a referral to an accounting you’ll accept as true with, I’d be at liberty to give you one).

I sit up for proceeding as your realtor and offering you the best possible stage of provider conceivable.

Yours sincerely,

[your name]

Oh, via the best way… If any of your mates or relations are occupied with purchasing or promoting a house, I’d like to be of provider to them. So, while you call to mind those folks, simply give me a choice with their title and quantity. I’ll be at liberty to observe up and have a tendency to their Real Estate wishes.

Which HUD-1 Information Is Important For Your Client’s Taxes?

The data reported within the HUD-1 pertains to the next tax statements and schedules:

Tax shape HUD-1 line

Schedule A (itemized deductions), Line 10 – Annual loan pastime deduction Line 901

Schedule A (itemized deductions), Line 10 – Points deduction Line 802

Schedule A (itemized deductions), Line 6 – Real property taxes deduction Line 1003, 1004

Schedule E (condo source of revenue), Line 20 – Depreciation (price of belongings is needed) Line 101, 102

Schedule E (condo source of revenue), Line 12a – Mortgage Interest Deduction Line 901, 802

Schedule E (condo source of revenue), Line 9 – Insurance 903, 1001, 1002

Schedule E (condo source of revenue), Line 16a – Real state taxes 1003, 1004

Schedule E (condo source of revenue), Line 18 – Other deductions 703, 801-811, 1005, 1101-1110, 1201-3, 1301-1302

Schedule D (capital achieve) Part I, II, Column d – Sales Price 401, 402

Schedule D (capital achieve) – Part I, II, Column e – Cost or different foundation 101, 102

Form 6252 (installment sale), Line 8 – Selling value 401, 402

Form 6252 (installment sale), Line 8 – Cost or different foundation 101, 102

Form 4797 (sale of industrial belongings), Part I, Column d – Cost or different foundation 401, 402

Form 4797 (sale of industrial belongings), Part I, Column f – 101, 102

HUD-1’s two sections

——————–

Section J, Summary of Borrower’s Transaction

This phase incorporates 6 sections, and principally summarizes the entries made to the phase L (Settlement fees, see under).

o Section 100, Gross Amount Due from Borrower

o Section 200, Amounts Paid By or In Behalf of Borrower

o Section 300, Cash at Settlement From/To Borrower

o Section 400, Gross Amount Due to Seller

o Section 500, Reductions in Amount Due to Seller

o Section 600, Cash at Settlement To/From Seller

Section L, Settlement Charges

That’s the place many entries are tabulated sooner than being introduced ahead to web page 1. Columns include fees which are paid from both the borrower’s or the vendor’s price range. Your last remark most probably would possibly not have entries in all strains.

o Section 700, Agency Commissions

o Section 800, Items Payable in Connection with Loan

o Section 900, Items Required via Lender to be Paid in Advance

o Section 1000, Reserves Deposited with Lender

o Section 1100, Title Charges

o Section 1200, Government Recording and Transfer Charges

o Sections 1300 & 1400, Additional Settlement Charges and Totals

Line By Line Description

Section 700, Agency Commissions

701 Commissions paid to actual property companies

702 Commissions paid to actual property companies

Section 800, Items Payable in Connection with Loan

801 Processing or originating mortgage charges. If the associated fee is a share of the mortgage quantity, the proportion can be mentioned.

802 “Points” charged via the lender. Each level is 1% of the mortgage quantity.

803 Appraisal charges. If paid with mortgage software sooner than last, it must be marked “POC,” (paid out of doors of last). The quantity can be proven, however would now not be integrated within the general charges you convey to agreement.

804 Cost of the credit score record if it isn’t integrated within the Origination Fee.

805 Inspections rate, performed on the request of the lender.

806 Private Mortgage Insurance (PMI) software rate.

807 Assumption rate, when purchaser takes over vendor’s current loan.

808 Miscellaneous pieces attached with the mortgage, akin to charges paid to a loan dealer.

809 Miscellaneous pieces attached with the mortgage, akin to charges paid to a loan dealer.

810 Miscellaneous pieces attached with the mortgage, akin to charges paid to a loan dealer.

811 Miscellaneous pieces attached with the mortgage, akin to charges paid to a loan dealer.

Section 900, Items Required via Lender to be Paid in Advance

901 Interest amassed at agreement for the period of time between last and the primary per thirty days cost.

902 Mortgage insurance coverage premiums due at agreement. Escrow reserves for loan insurance coverage are recorded later. If your loan insurance coverage is a lump sum cost excellent for the lifetime of the mortgage it must be famous.

903 Hazard insurance coverage premiums due at agreement. It isn’t used for insurance coverage reserves that can move into escrow.

904 Miscellaneous pieces: flood insurance coverage, loan lifestyles insurance coverage, credit score lifestyles insurance coverage and incapacity insurance coverage premiums.

905 Miscellaneous pieces: flood insurance coverage, loan lifestyles insurance coverage, credit score lifestyles insurance coverage and incapacity insurance coverage premiums.

Section 1000 Reserves Deposited with Lender

1001-1007 Funds used to begin the borrower’s escrow account, from which the lender pays subsequent 12 months’s premiums. Each loan cost contains an quantity that covers a portion of those routine bills.

1008 Escrow adjustment calculated via the agreement agent via evaluating other escrow formulation to guarantee the lender does now not acquire extra escrow price range than allowed.

Section 1100, Title Charges

1101 Settlement agent’s rate.

The charges for the summary or name seek and exam are entered in strains

1102 Abstract / name seek rate

1103 Examination rate

1104 Title insurance coverage binder (also known as a dedication to insure). Payment for name insurance coverage insurance policies is entered later.

1105 Deed arrangements document fees and paintings on mortgages and notes

1106 The rate charged via a notary public for authenticating the execution of the agreement paperwork

1107 Attorney’s charges.

1108 Title insurance coverage (with the exception of the price of the binder).

1109 Informational strains disclosing prices for the separate name insurance coverage insurance policies (Only line 1108 is carried ahead.)

1110 Informational strains disclosing prices for the separate name insurance coverage insurance policies (Only line 1108 is carried ahead.)

1111-1113 Other title-related fees which range via location: tax certificates rate / non-public tax rate

Section 1200, Government Recording and Transfer Charges

1201 Recording rate

1202 City or County recording rate

1203 State recording rate

1204-1205 Miscellaneous recording rate pieces

Section 1300, Survey and inspections charges (for pests, lead-based paint, radon, structural inspections, inspections for heating, plumbing, or electric apparatus) and residential guaranty.

Line 1400 Total agreement fees paid from borrower’s and vendor’s price range. They also are entered in Sections J and Ok,

strains 103 and 502.

Section J, Summary of Borrower’s Transaction

Section 100, Gross Amount Due from Borrower

Line 101 Gross gross sales value of the valuables.

Line 102 Personal belongings fees (draperies, washing machine, dryer, outside furnishings, and ornamental pieces bought from the vendor)

Line 103 Total agreement fees to borrower (from Line 1400 phase L)

Lines 104-105 Amounts owed via the borrower or in the past paid via the vendor (come with stability within the vendor’s escrow account if the borrower is assuming the mortgage and uncollected rents borrower would possibly owe the vendor)

Lines 106-112 Item paid upfront via vendor (Prorated portion of town/county taxes)

Line 120 Gross quantity due from borrower. Total of Lines 101 via 112

Section 200, Amounts Paid By or In Behalf of Borrower

Line 201 Buyer’s credit score for the earnest cash paid when the be offering used to be approved.

Line 202 The new mortgage paid to the borrower via the lender.

Line 203 Loan borrower assumes or takes name matter to an current mortgage or lien at the belongings.

Lines 204-209 Miscellaneous pieces paid via or on behalf of the consumer (allowance the vendor is making for maintenance or alternative of things or a notice vendor accepts from borrower for a part of the acquisition value)

Lines 210-219 Bills vendor has now not but paid, however owes (taxes, exams or hire amassed upfront via the vendor for a duration extending past the agreement date)

Lines 220 Total for all pieces in Section 200. The general is added to the borrower’s proceeds.

Section 300, Cash at Settlement From/To Borrower

Lines 301 Summary of the full quantity due from the borrower.

Lines 302 Summery of all pieces already paid via or for the borrower.

Lines 303 The distinction between strains 301 and 302 representing the amount of cash the borrower owes at last. If unfavorable quantity the borrower will obtain price range again at last.

Section Ok, Summary of Seller’s Transaction

Section 400, Gross Amount Due to Seller (quantities added to the vendor’s price range)

Line 401 Gross gross sales value of the valuables.

Lines 404-405 Amounts owed via the borrower or in the past paid via the vendor (escrow account’s stability or uncollected rents)

Lines 406-412 Items paid upfront via the vendor (prorated portion of town / county taxes)

line 420 is the gross quantity because of the vendor. Total of Lines 401 via 412.

Section 500, Reductions in Amount Due to Seller (quantities are subtracted from the vendor’s price range)

line 501 When a 3rd celebration holds the borrower’s earnest cash deposit, and pays it at once to the vendor.

line 502 Total from line 1400, the vendor’s general fees as computed in Section L.

line 503 When borrower assumes or takes name matter to current liens which might be deducted from the gross sales value.

line 504-505 First and/or 2nd loans which can be paid-off as a part of agreement (together with amassed pastime).

line 506-509 Miscellaneous entries

line 506 Deposits paid via the borrower to the vendor or 3rd celebration rather than the agreement agent

line 510-519 Bills unpaid via vendor (taxes, exams or hire amassed upfront )

line 520 Total of all pieces in Section 500. The general is deducted from the vendor’s proceeds.

Section 600, Cash at Settlement To/From Seller

line line 601 Gross quantity because of the vendor, from line 420.

line 602 Total discounts in vendor’s proceeds, from line 520.

line 603 Difference between strains 601 and 602. Cash quantity paid to vendor (if a unfavorable quantity the vendor owes cash at last)

Tags :