In which section of the GFE and HUD-1 are flood insurance costs included?

Flood insurance costs are typically included in "Prepaid items and deposits" on the Good Faith Estimate (GFE) and HUD-1 Settlement Statement. This section encompasses costs that the borrower is required to pay in advance of the settlement. It is essential for borrowers to understand that these costs will need to be paid upfront before the closing of the loan.

Prepaid items may include various expenses, such as property taxes, homeowner's insurance, and flood insurance, which are necessary to protect the property and the lender's interest in the mortgage. Including flood insurance in this category is crucial, as it ensures that the property is covered against flood risks right from the time of closing, providing both the buyer and the lender with security against potential water damage.

The other sections do not capture flood insurance costs in the same manner. For example, "Items payable in connection with the loan" typically refers to fees directly associated with obtaining the mortgage rather than ongoing or upfront insurance premiums. Therefore, understanding the structure of these documents is vital for appreciating how flood insurance and other related costs are categorized.