Texas Crammer Practice Exam

A buyer's mortgage loan on a closing statement is classified as:

1. A debit to the buyer

2. A credit to the buyer

3. A credit to the seller

4. A debit to the lender

The correct answer is: A credit to the buyer

In a closing statement, the classification of items as debits or credits is essential for determining who owes what at the closing of a real estate transaction. A mortgage loan is viewed from the perspective of the buyer, who is obtaining a loan to finance the purchase of the property. When a buyer secures a mortgage loan, it is essentially a source of funds for the buyer to pay the seller for the property. This means that the loan amount is added to the buyer's side of the closing statement as a credit, indicating that the buyer has received this money to apply toward the transaction. Therefore, it increases the total amount available to the buyer, highlighting that they have an obligation to repay this loan in the future. Understanding this classification is crucial, as it reflects the financial dynamics of a real estate closing, where loans are essentially credits that enable buyers to complete their purchase. The other options do not accurately represent the monetary flow and obligations associated with a buyer's mortgage loan.