The Settlement Cost, which is reported at the closing on a “HUD1” or “Settlement Statement,” has been replaced for standard dwelling units for 4 units or less; by the “Closing Disclosure” or “CD” on October 3rd 2015 when TRID took effect in the lending industry. “TRID” is the merger of documents, supposedly designed to help the consumer better understand the cost associated with their mortgage loan. TRID = TILA RESPA Integrated Disclosure.
Under TRID, the closing disclosure is, in reality, the final Loan Estimate or “LE” that has been supersized. Once the borrower receives the CD, the federal required three day waiting period will be begin before the mortgage loan can be closed.
The LE and CD are now being used in place of the “HUD1” on primary and secondary residential properties, or on all non-investment dwelling units, whether a purchase or a refinance. The HUD1 can still be used for other types of real estate purchases, such as investment properties purchased by a corporation or LLC, land purchases, and commercial properties. It’s the lender who is responsible for determining which forms are to be used. Using the wrong forms may result in penalties for the lender.
Both the HUD1 and closing disclosure list all the final cost one could expect to pay associated with the mortgage loan whether a purchase or refinance. Both forms contain all fees that have been paid by the buyer or seller, for purchases on the buyer’s behalf at closing or prior too.
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