Question

If the buyer's credits are greater than the buyer's debits on the Closing Disclosure, the buyer will

a) Receive a refund at closing
b) Owe additional funds at closing
c) Cancel the transaction
d) Postpone the closing date

Answer 1

When a buyer's credits exceed debits at closing, they receive a refund. This is similar to getting a tax refund for overpayment. Funds for prepaid expenses like insurance and taxes may be held in escrow.

Step-by-step explanation:

If the buyer's credits are greater than the buyer's debits on the Closing Disclosure, the buyer will receive a refund at closing. This situation is somewhat analogous to a tax refund, where you get money back if you've overpaid. In the context of a real estate transaction, credits can include earnest money deposits, loan funds, and seller credits, while debits include the purchase price, loan fees, and prepaid taxes and insurance held in escrow.