Colibri Real Estate 30-Hour Alabama Post License Practice Exam

What is the term for money that the buyer or seller must pay at closing?

1. A debit

2. A credit

3. Escrow

4. Interest

The correct answer is: A debit

The term for money that the buyer or seller must pay at closing is identified as a debit. In real estate transactions, a debit refers to the amount of money that is owed or the outflow of funds an individual must pay at closing. This amount typically includes various closing costs such as title insurance, appraisal fees, and any outstanding taxes that must be settled during the transaction. Understanding debits in the context of closing costs is crucial for buyers and sellers, as these amounts have to be accounted for in the closing statement and must be settled in order for the sale to proceed. It highlights the financial responsibilities of the parties involved during the closing process. Other terms, such as credit, escrow, and interest, pertain to different concepts in real estate transactions, further clarifying the financial aspects of buying or selling property.