Hawaii Pre-Licensing National Practice Exam

What information is included in the Housing and Urban Development (HUD) settlement statement?

1. Buyers' and sellers' closing costs

2. Property maintenance history

3. Buyers' credit scores

4. Real estate agent commissions

The correct answer is: Buyers' and sellers' closing costs

The HUD settlement statement, also known as the HUD-1 form, provides a comprehensive overview of the financial aspects involved in a real estate transaction. Specifically, it details the closing costs for both buyers and sellers, outlining the various fees associated with the sale of the property. This includes costs like loan origination fees, title insurance, inspection fees, and any prepaid items such as property taxes and homeowners insurance. Including the buyers' and sellers' closing costs helps ensure transparency in the transaction, allowing both parties to clearly understand what they owe and what they are receiving. This level of detail is crucial for both parties to reconcile the funds transferred during the closing process. Other options do not accurately represent the information contained in the HUD settlement statement. Property maintenance history is not typically included, as it pertains more to the condition of the property rather than financial transactions. Buyers' credit scores are not disclosed in this document since they relate to the borrower’s creditworthiness rather than the real estate transaction details. Real estate agent commissions might be reflected but are typically detailed through separate agreements and not generally specified in the HUD settlement statement itself. Thus, focusing on the accurate inclusion of closing costs clarifies the document's primary purpose and utility in real estate transactions.