Which of the following statements is NOT true regarding a settlement statement?

The statement about the seller's loan payoff being a debit to the seller and a credit to the buyer is not true regarding a settlement statement. In a real estate transaction, the seller's loan payoff, which is the amount required to pay off the existing mortgage, is considered a liability that the seller must settle at closing. This amount is recorded as a debit on the seller’s side of the settlement statement, reflecting the amount that the seller owes to the lender.

On the buyer's side, however, this loan payoff would not be listed as a credit. Instead, the buyer typically pays the agreed purchase price for the property, which doesn’t include paying off the seller’s mortgage directly but rather transferring ownership. Thus, the loan payoff impacts the seller's final proceeds from the sale, not the buyer's costs in a direct credit sense.

This provides clarity on how funds flow during a transaction, reinforcing that while the seller assumes the responsibility for their mortgage payoff, it does not result in a credit for the buyer on the settlement statement. Understanding this helps to accurately interpret entries on settlement statements and ensures accurate accounting of the financial transactions at closing.