The HUD-1 Settlement Statement is the document which summarizes all financial aspects and costs associated with your purchase and the loan you have obtained. Each of these costs, charges and adjustments are itemized separately and will be explained to you by the attorney or settlement officer who conducts settlement. The settlement sheet serves as your “receipt” for all sums, which you pay in connection with the purchase.
At settlement, in addition to the HUD-1 Settlement Statement, you and the Seller will sign various documents necessary to transfer title, to establish your loan obligations and to secure the lender’s interest. Of the documents you will see, the most important are the following: the Deed, the Note, the Deed of Trust and the Truth-In-Lending Disclosure. The Deed is the legal instrument which is signed by the seller(s) and which transfers title to the real estate from the seller(s) to you. The Note is the instrument that constitutes your written promise to repay the money loaned to you by your mortgage lender. It creates a personal obligation to repay and sets forth the terms (i.e., interest rate, monthly payment) for repayment. The Deed of Trust is the instrument by which you grant a lien upon the purchased real estate to the mortgage lender to secure your promise to repay the Note.The Deed of Trust is the instrument that authorizes the lender to institute a foreclosure sale on your property if you fail to repay the loan as agreed. The Truth-In-Lending Disclosure summarizes the actual costs associated with the loan you have obtained. Also, to further familiarize you with some of the standard forms, we have included sample copies for your review, beginning on page 24 of this booklet.
As part of the settlement CAPITOL TITLE will collect all certified guaranteed funds and make the appropriate disbursements in accordance with the HUD-1 Settlement Statement. If the Seller has an existing mortgage on the property, CAPITOL TITLE will use a portion of the sales proceeds to clear the title by paying off the loan and will record the required release to remove the mortgage lien.
CAPITOL TITLE will also calculate the adjustments as of the date of settlement for taxes, homeowner’s association dues and other items contemplated under the Contract. These items will be shown on the HUD-1 as credits to or deductions from the gross amounts due to or from the respective parties. In Maryland the sale proceeds are typically paid to the Seller at settlement; in the District of Columbia and Virginia, however, funds are generally disbursed immediately after recording of the documents.
Following settlement, CAPITOL TITLE will return the signed, original Note to your lender and record the Deed and Deed of Trust in the District or County Land Records office. Upon recording, CAPITOL TITLE will issue a policy of title insurance to you and to your lender. The original Deed will be forwarded to you directly by the Land Records office after recordation.
At settlement your CAPITOL TITLE settlement officer will answer any questions you may have, and will provide you with a complete set of copies of documents for your files. Moreover, we will remain available to answer questions you may have after the transaction is complete.
Finally, when visiting one of our offices, please ask your settlement officer for a copy of an Amortization Schedule, which illustrates the principal and interest allocated to each of your loan payments.
We look forward to working with you, and we welcome your comments and questions so that we can serve you better.