Which item will appear as a credit to the buyer at closing?

• A. Earnest money
• B. Binder's deposit
• C. Purchase price
• D. Title insurance premium

Answer: (B)

When a closing statement is prepared, credits to the buyer are funds already paid that will reduce the amount the buyer owes at closing. The binder’s deposit fits this, because it’s the money the buyer has already put down to bind the contract. At closing, that amount is applied toward the purchase price, so it appears as a credit to the buyer on the settlement statement. The purchase price itself is what the buyer pays the seller, so it’s a debit to the buyer, not a credit. The title insurance premium is another closing cost paid by the buyer, also a debit. Earnest money is a pre-contract deposit, but in this context the item that clearly reduces the amount due at closing is the binder’s deposit.