Escrow closing statement shows debits and credits for buyer and seller. Which statement is correct?

A new mortgage taken out by the buyer is actually a credit to the buyer, not a debit — it represents loan proceeds coming in to help fund the purchase price, reducing the amount the buyer must bring to closing in cash. A debit to the buyer would include the purchase price itself, loan origination fees, or prepaid items.

Prepaid property taxes are a credit to the seller, not a debit — if the seller has already paid property taxes covering a period beyond the closing date, the buyer owes the seller a reimbursement for that prepaid period, which shows as a credit to the seller and a debit to the buyer. A debit to the seller would include items like unpaid liens, agent commissions, or the mortgage payoff.

Discount points paid by the buyer are a debit to the buyer, not a credit — they represent an upfront cost the buyer pays to the lender to reduce the mortgage interest rate, and costs are always debits on a closing statement. A credit to the buyer would include the new mortgage proceeds, earnest money already deposited, or seller concessions.