Final answer:
In a new loan closing, the net loan proceeds are credited to the seller, as this reflects the funds from the mortgage loan being transferred to the seller minus any fees or deductions. This is part of the financial transaction where the ownership of the property transfers from the seller to the buyer, with the bank providing the loan amount to effectuate this transaction.
Step-by-step explanation:
When closing a new loan, the net loan proceeds are typically recorded as a financial transaction that impacts the parties involved in the loan agreement. Specifically, in real estate transactions such as a home purchase, the net loan proceeds are given to the home seller, which is the amount the buyer borrows from the bank minus any fees or prior agreed upon deductions. Therefore, the correct answer is the net loan proceeds become a credit to the seller.
The mortgage is an asset to the bank, as it represents a legal obligation for the borrower to make payments over time, often a span of 30 years for a traditional mortgage. Initially, the borrower puts down a certain percentage of the home's purchase price as a down payment, and the remainder is financed through a mortgage loan, which is then credited to the seller at closing, reflecting the transfer of ownership to the buyer.
Credit cards reflect a different kind of lending, where they represent a short-term loan, directly transferring money from the credit card company's checking account to the seller, with the user owing the money at the end of the banking month. The concept of lending and credit is central to both cases; however, their management and time-frames differ significantly. In real estate transactions, the credit to the seller signifies the bank has funded the loan amount to the seller on behalf of the buyer, who then becomes responsible for repayment.