Final answer:
The statement is true as costs at closing are indeed allocated between the seller and buyer, which can include taxes, insurance, and escrow fees. Escrow plays a significant role in securing real estate transactions, and understanding credit is important as it pertains to mortgage agreements.
Step-by-step explanation:
The statement in question pertains to the allocation of costs between the seller and buyer at the closing of a real estate transaction, and it is true. These costs are part of the closing process and can include items such as property taxes, home insurance, and possibly service fees related to escrow. Escrow is an arrangement whereby a third party holds and regulates the payment of funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account that is only released when all of the terms of an agreement are fulfilled as overseen by the escrow company.
Escrow can be beneficial in real estate transactions as it allows for the consolidation of home insurance and property tax payments into the monthly mortgage payment. This ensures that these important expenses are not overlooked and helps in budgeting for homeowners.
Understanding the concept of credit is also crucial in real estate transactions, as buying a home often involves obtaining a mortgage—a form of long-term credit. Credit allows for the acquisition of goods or services with the trust that future payment will be made, which in the case of a mortgage means agreeing to repay the borrowed funds over a specified period.