In a settlement statement, where is the payoff for an existing mortgage placed?

In a settlement statement, the payoff for an existing mortgage is categorized as a debit to the seller. This reflects the fact that the seller must settle or pay off their current mortgage balance in order to transfer the property to the buyer free of that debt. Since the settlement statement outlines the financial transactions involved in the sale, any amounts owed by the seller, including their mortgage payoff, are presented as debits.

This accounting method ensures that the seller's obligations are clearly recorded and subtracted from the proceeds of the sale, allowing for a clear understanding of how much the seller ultimately receives after all debts are settled. The other options do not correctly represent the nature of the mortgage payoff in a settlement statement. For instance, crediting the buyer would imply a benefit or reduction in cost for them, which does not align with the responsibility of the seller to settle their existing liabilities.