Understanding the HUD-1 Form: Your Complete Guide to Reverse Mortgage Closing Costs

What You Need to Know Before Your Closing

When you’re preparing to finalize a reverse mortgage, one critical document you’ll encounter is the HUD-1 settlement form. This standardized document, created by the U.S. Department of Housing and Urban Development, serves as your comprehensive breakdown of every expense and credit associated with your loan transaction. Today, this form is primarily used for reverse mortgage closings, though it was once the standard for all mortgage products before October 3, 2015.

When Will You Receive Your HUD-1?

Timing matters. Your lender is required by law to provide you with this settlement document no later than the business day before closing—but only upon your request. If you don’t ask for it in advance, you’ll likely see it for the first time when signing closing documents. You do have the option to waive early review and receive it after closing, though this isn’t advisable. Why? Because reviewing your costs while you can still ask questions and negotiate gives you leverage your lender is still motivated to preserve.

One important caveat: if you skip the settlement meeting itself, your lender doesn’t have to show you the form at or before closing. Attending closing ensures you can verify all charges while you still have recourse.

Breaking Down Each Section of the HUD-1

The settlement statement spans three pages, each containing specific financial and transactional information.

Page One: This opening section captures your personal details, property information, and itemizes costs for both buyer and seller when real estate transfer occurs. It sets the foundation for understanding the full transaction scope.

Page Two: This is where the financial details truly emerge. Here you’ll find real estate broker commissions (if applicable) and the detailed lineup of every closing cost. The hud1 form breaks these into distinct sections:

• Section 800 - Loan Origination & Appraisal Costs: Your lender’s origination charge appears here, along with any discount points you purchased to secure a better interest rate. Third-party fees follow, covering your home appraisal, credit report review, flood certification, and tax service. These expenses reflect the professional valuations and credit assessments your lender conducts before approving your loan.

• Section 900 - Interest & Insurance Charges: Expect to pay daily interest charges that cover the period from closing through month-end. Any mortgage insurance premiums (mandatory for federally-backed reverse mortgages) appear here. Homeowners insurance premiums due at closing also get itemized in this section.

• Section 1000 - Reserves & Deposits: For traditional mortgages with less than 20% down, this section shows your escrow account funding. With reverse mortgages, these amounts are typically deducted from your loan proceeds rather than paid upfront. The form shows what gets withheld monthly for homeowners insurance, mortgage insurance, and property taxes.

• Section 1100 - Title Insurance: Your lender requires a title insurance policy; you may also purchase an optional owner’s policy for additional protection. This section itemizes both costs, ensuring your lender (and potentially you) are protected against future claims on the property.

• Section 1200 - Government Recording Fees: Creating an official record of your lender’s interest in the property isn’t free. This section details recording fees required to establish legal documentation of ownership and lender interest.

Page Three: This final page provides your comparison between the Good Faith Estimate (GFE) you received during application and your actual closing costs. It also outlines your loan terms—borrowed amount, repayment period, interest rate, whether your rate adjusts, and any special features like negative amortization or balloon payments. If your lender pays certain expenses from your home equity, those monthly itemizations appear here too.

Comparing Your GFE to Actual Costs

The HUD-1 allows direct comparison between estimates and reality. While some variation is expected, only certain items can differ, and those changes cannot exceed 10%. This comparison section helps you identify whether your final costs align with original projections.

HUD-1 vs. Other Settlement Documents

Not all closing transactions use the HUD-1 today. Outside of reverse mortgages and mortgages closed before October 3, 2015, most real estate transactions now use the closing disclosure form instead. The HUD-1 specifically remains standard for reverse mortgages, including Home Equity Conversion Mortgages (HECMs) backed by the Federal Housing Administration.

For refinancing transactions without a seller involved, lenders often substitute the HUD-1A—a condensed version that excludes selling-related costs.

Where to Access Your Settlement Document

If your loan hasn’t closed yet, request your hud1 form from your lender—ideally at least one business day before closing. Once your transaction settles, your settlement statement should accompany your other closing documents. If you’ve already closed and can’t locate it, contact your lender to request a copy.

Why Your HUD-1 Matters

This settlement statement represents transparency in one of life’s largest financial transactions. By carefully reviewing each section, understanding what you’re paying for, and comparing estimates to actual charges, you maintain control over your borrowing costs and ensure no unexpected expenses emerge at the closing table.