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Topic 14.6: General Rules for Debits and Credits

Learning Objective

After successfully completing this topic, you will be able to explain the closing statement entries.

Overview

This list shows typical items that will be charged or credited to the parties in a real estate closing. The purchase and sale contract may cause these charges and credits to vary based on negotiation between the parties.

Items credited to seller shown in Section M of the Closing Disclosure

• Purchase price
• Items paid by the seller in advance

Items debited to seller shown as totaled in Section N of the Closing Disclosure

• Recording mortgage satisfaction
• Items from closing cost details
• Documentary stamp taxes on deed
• Broker’s commission
• Payoff of mortgages
• Property tax proration
• Prepaid rent proration
• Security deposit

Items credited to buyer shown in Section L of the Closing Disclosure

• Earnest money deposit
• New first mortgage
• Property tax proration
• Prepaid rent proration
• Security deposit

Items debited to buyer shown in Section K of the Closing Disclosure

• Items from closing cost details
• Mortgage loan costs
• Appraisal fee
• Survey
• Title insurance-lender
• Title insurance-owner
• Documentary stamp taxes on note
• Intangible taxes on mortgage
• Recording fees
• Insurance premium
• Prepaid interest on new mortgage
• Purchase price