Which entry would typically be a credit to the Buyer on the closing statement?

Which entry would typically be a credit to the Buyer on the closing statement?

• A. Purchase price
• B. Loan proceeds
• C. Title insurance
• D. Seller's payoff

Answer: (B)

In a closing statement, credits reduce the amount the buyer must bring to closing, while debits increase it. Loan proceeds are funds coming from the lender to the buyer to help cover the purchase, so they reduce the buyer’s cash at closing. That makes loan proceeds a credit to the buyer. Purchase price is money the buyer pays to the seller, so it’s a debit to the buyer. Title insurance is a closing cost that the buyer typically pays (or shares), so it’s usually a debit to the buyer rather than a credit. The seller’s payoff is the amount needed to clear the seller’s existing loan, which affects the seller’s net and is not a credit to the buyer. Therefore, the item that would typically be a credit to the buyer is loan proceeds.

In a closing statement, credits reduce the amount the buyer must bring to closing, while debits increase it. Loan proceeds are funds coming from the lender to the buyer to help cover the purchase, so they reduce the buyer’s cash at closing. That makes loan proceeds a credit to the buyer.

Purchase price is money the buyer pays to the seller, so it’s a debit to the buyer. Title insurance is a closing cost that the buyer typically pays (or shares), so it’s usually a debit to the buyer rather than a credit. The seller’s payoff is the amount needed to clear the seller’s existing loan, which affects the seller’s net and is not a credit to the buyer. Therefore, the item that would typically be a credit to the buyer is loan proceeds.