Florida Real Estate Sales Associate Examination Content OutlineReal Estate Closings and Post-ClosingEasy
Which of the following is typically a debit to the buyer at closing?
- AEarnest money deposit
- BNew mortgage amount
- CUnpaid property taxes for the current year
- DPurchase price
Show answer & explanationAnswer & explanation
Correct answer: D. Purchase price
At closing, a debit to the buyer represents an amount they owe. The purchase price is the most significant amount the buyer owes to the seller for the property.
Why the other options are wrong
- A. The earnest money deposit is a credit to the buyer, as it's money they've already paid towards the purchase.
- B. The new mortgage amount is a credit to the buyer, as it's funds received to pay for the property.
- C. Unpaid property taxes, if prorated, would be a credit to the buyer if the seller is responsible for a portion, or a debit if the buyer is responsible for an earlier period.
Debit to Buyer
An amount owed by the buyer at closing, increasing the total funds the buyer must bring to the closing.
- Represents an expense or an amount due from the buyer.
- Increases the cash required from the buyer at closing.
- Examples include purchase price, loan origination fees, appraisal fees.
Memory trick: Credits Come In, Debits Go Out.