Closing costs are fees paid to help facilitate the sale of a home and vary based on where you are but as a rule, you can estimate that they typically total 2% to 7% of the home’s purchase price. So on a $250,000 home, your closing costs would amount to anywhere from $5,000 to $17,500. Yep that’s one heck of a wide range. More on that below.
Both buyers and sellers typically pitch in on closing costs, but buyers shoulder the lion’s share of the load (3% to 4% of the home’s price) compared with sellers (1% to 3%). And while some closing costs must be paid before the home is officially sold (e.g., the home inspection fee when the service is rendered), most are paid at the end when you close on the home and the keys exchange hands. Here is some of what a buyer expects to pay for with average prices in Montgomery County, MD:
- loan origination fee ($1500)
- credit report fee ($21)
- underwriter fee
- appraisal fee ($413)
- home inspection fees ($500)
- title search fees ($750)
- title insurance ($450)
- a survey fee ($515)
- stamp taxes on your home loan
Sellers pay for:
- A closing fee
- taxes on the home sale
- attorney fees ($369)
- title transfer fee
- real estate agent commissions (5-6% of sale price)
Specifically in Montgomery County, Maryland, homebuyers should expect the total closing costs to run between 2% and 5% before adding broker fees up to 6%. As an example, the total closing costs for a $200,000 property with a 5% interest rate loan closing on the first day of a 30 day month brings the total to $8,753 or 4.37% of the property price.
What Goes Into Closing Costs?
A lender is required to supply a closing disclosure statement at least three business days prior to the closing. Lenders vary on what additional items may be included in the fees, many of which are negotiable. The average origination fee that lenders charge to process the paperwork in Maryland is $1,093. Document preparation fees are $80, and the tax service cost is approximately $75. This brings the total average loan origination fee to $1,153.
The average third-party fees are $413 for appraisals, $369 for a settlement attorney, $21 for a credit report, $10 for a flood certification, $125 for a pest inspection, $400 for a lead inspection if the house was built before 1970, $100 for postage and courier services, and $515 for a survey to verify the property lines. Some lenders may charge for all or some of the aforementioned third-party fees, which can total up to an additional $1,953 or more.
The following fees and factors add to the complete total closing costs for a property in Maryland.
State Recordation and Transfer Fees
Each county in Maryland has its own rate for state recordation tax and transfer tax. These taxes are split 50/50 between the buyer and the seller of the property. The state recordation tax is a flat rate per $1000 for the property above $50,000. The first $50,000 is exempt for owner-occupied property. For Montgomery County, the rate is $6.90 from $50,000 to $500,000 and $10 per $1,000 above $500,000. This amounts to a $1,035 tax on a $200,000 property. The transfer tax in Montgomery County is 1.5% (1% for county and 0.5% for the state) of the property cost. This amounts to a $3,000 tax. The state transfer tax is exempt for first-time buyers, but sellers are still responsible for payment on their portion at 0.25%. The total state recordation and state and county transfer taxes are $4,380 on a $200,000 property purchase in Montgomery Country. Since the cost is split 50/50, the total cost for the buyer is around $2,118.