Imagine you’ve just inked a contract to snap up that dream home in Maryland — or maybe you’re the one letting go of your Maryland residence to chase a new adventure elsewhere. What’s next on the agenda? The final hurdle in any property deal is the closing, the moment when buyer and seller divvy up a bunch of fees and charges collectively dubbed closing costs. Maryland usually clocks these expenses at around 3.7% of the home’s sale price, sidestepping real estate agent commissions. To put numbers on it, the median home price in Maryland stood at $405,200 as of October 2023. This would peg closing costs at just shy of $15,000 for a property at that median. Of course, what you pay varies wildly depending on location — Baltimore’s median price is just over $207K, turning into a $7,668 closing fee, whereas in Bethesda, a posh Washington suburb, the median home price rockets past $1.1 million, pushing those closing costs north of $40,000.
Who Covers Closing Costs in Maryland — Buyer or Seller?
As a rule, both parties usually shoulder some part of the closing fees, which typically include:
- Loan application and origination charges: Lenders often tack on fees for evaluating and kickstarting your mortgage loan.
- Credit report expenses: Running your credit history usually comes with a small price tag from the lender’s side.
- Mortgage points: Fancy shaving your interest rate? You can buy “points,” each costing about 1% of the loan, lowering your rate by roughly 0.25%. Frontloading cash here can translate to long-term savings.
- Appraisal and inspection: Your lender insists on a home appraisal to peg fair market value; meanwhile, an inspection isn’t mandatory but highly advisable to sniff out hidden issues both minor and major that could wreak havoc down the line.
- Title search and insurance: Before ownership changes hands, a title search roots out any legal claims or liens on the property, and title insurance safeguards against surprises that might surface later. Often, buyer and seller split these costs.
- Transfer and recordation taxes: Usually divided between buyer and seller unless negotiated otherwise, Maryland’s transfer tax is generally 0.5%, dipping to 0.25% for eligible first-timers. Recordation tax rates can vary by county.
- Prepaids: Some lenders ask for a down payment on property taxes and homeowners insurance — sometimes covering several months upfront — held in escrow and paid out when due.
Key Maryland Housing Market Numbers (October 2023)
Median home price in Maryland: $405,200
Median home price in Baltimore: $207,250
Median home price in Bethesda: $1,100,000+
Average closing cost percentage: ~3.7%
What About Sellers? Closing Costs on Their Plate
Sellers might find themselves chipping in for certain things — from footing bills for repairs to agreeing to cover a slice of the buyer’s closing costs. While you’re under no obligation to comply, sometimes such gestures grease the wheels to seal the deal.
- Recording fees: Counties often charge a modest fee to officially log the new deed.
- Paying off your existing mortgage: If you haven’t cleared your home loan, the remaining balance will be deducted during closing and wired to the lender, possibly incurring a wire transfer fee.
How to Keep Closing Costs in Maryland in Check
Though government taxes are pretty much set in stone, many other fees are negotiable or reducible. For prospective buyers, tapping into state and local assistance programs can be a game-changer, providing vital help with down payments and closing cost burdens, nudging homeownership within reach.
Sellers, meanwhile, have some pull when it comes to negotiating Realtor commissions — often the biggest chunk of closing costs. Bargaining between a 5% and 6% commission can add up to serious dollars, especially when the asking price climbs.
Find a Real Estate Agent Who Gets Your Turf
The local agent who’s savvy about your neighborhood can be your best ally for a hassle-free closing. Start your search by gathering referrals from friends and family, then vet candidates through online reviews. Don’t settle on the first person you meet—chat with a handful before choosing your champion.
FAQs About Closing Costs in Maryland
Does the buyer cover closing costs in Maryland?
Sure does — in Maryland, as in every other state, both buyers and sellers split closing costs. Most of what buyers pay relate to the mortgage loan, covering things like application fees, credit checks, and the home appraisal.
Which fee tends to be the priciest in closing costs?
Real estate commissions take the crown as the heaviest closing cost for sellers. Typically landing between 5% and 6% of the sale price, these fees can add up to a hefty sum.
