your process looks good, i would recommend two things.
complete Step 1 and 2 on Host1, then reboot that node - finished
Step 3 - manually failover your instance via Failover Cluster Manager... it will move your resources and upgrades the databases
then complete Step 4 and 5 on Host2, reboot and done.
Do NOT rely on the upgrade process to move your resources... do it on your own.
And you have to apply the CU before moving the resources on Host1!