What is a debit on a closing statement?

A debit on a closing statement represents an amount that the debited party must pay. In real estate transactions, closing statements itemize the financial aspects of the sale, detailing amounts due from both the buyer and seller. When a charge or obligation is described as a debit, it indicates that this amount is owed and must be settled by the party indicated.

For instance, if a seller has a mortgage that must be paid off during the closing process, the amount of that mortgage would be listed as a debit to the seller. Similarly, if the buyer incurs certain closing costs, those costs would be debited from their account as well. The concept of debits and credits is fundamental in accounting, where debits typically represent outgoing funds or liabilities that need to be satisfied, contributing to a clearer understanding of financial responsibilities in the transaction.