Colorado Broker Practice Test

The buyer's loan amount is typically shown as a which on the closing statement?

Credit to Buyer Debit to Buyer Debit to Seller Credit to Seller

Correct Answer:

Credit to Buyer

Explanation:

At closing, funds flowing into the transaction that reduce what a party must bring to the table are credits. The buyer’s loan amount is money provided by the lender to finance the purchase, and those loan proceeds are applied toward the purchase price (often paid to the seller at closing). Because this money benefits the buyer by offsetting the amount they need to contribute, it appears as a credit to the buyer on the closing statement. In short, loan proceeds reduce the buyer’s out-of-pocket need, so they’re recorded as a credit to the buyer.

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