What Are My Closing Costs When Buying a Home in Montgomery County MD?
When buying a home in Maryland, you will be required to pay closing costs in addition to the price you are paying for your new house.
Closing costs are simply the fees associated with purchasing a home or if you are refinancing, you will have to pay as well.
One of the costs that are different from county to county in Maryland is the County Transfer Taxes
The costs may differ somewhat, but this report will give an accurate estimate of what you should expect to pay when buying a home in Maryland.
The breakdown for each of your charges are as follows:
Title Services and Lender Tittle
You will be charged for Title Services and Lender's Title There are two main types of title insurance: owner’s title insurance, which protects the property owner from title issues, and lender’s title insurance, which protects the mortgage company.
There are two main types of title insurance: owner’s title insurance (optional to the buyer, but recommended), which protects you as the property owner from any title issues, and the lender’s title insurance, which protects the mortgage company and it is required by your lender. A lender's title policy will cost you around .5% of the sales price.
Government Recordings and Transfer Taxes
These charges are typically split equally between the buyer and the seller. They are:
County Transfer Taxes
State Transfer Taxes
County Recordation Taxes
County Transfer Tax: In a purchase of a home Montgomery County Maryland you and the seller will share this cost 50-50. If the home is valued at $300,000, the county transfer tax is 1% of the sales price. Your portion as a buyer is .5%. In this purchase, the total County Transfer Tax is $3,000 Your portion to pay as a buyer is $1,500
State Transfer Tax: The State Transfer Taxes is 1/2% of the Home's sales price. Just like the County taxes, this cost is typically split 50-50 between the buyer and the seller. In our example of a $300,000 purchasing price, the total State Transfer Tax is $1,500. Your portion to pay as a buyer is $750
Note: If you are a first-time buyer in Maryland, you do not pay State Transfer Taxes..but the seller will still be obligated their own portion as sellers...in this case, you pay $0 and the sellers still pay $750
Recordation Taxes: The County charges this to both, the buyer and the seller. The total charge is computed with this formula. Take .89% of the sales price up to $500,000. If the house purchase price is above $500,000, you will pay in addition a 1.35% of any portion above $500,000 - Don't over complicate this...both buyer and seller pay .89% up to $500,000 home..if the house is only $300,000...then you only pay $2670 after splitting it worth the seller...Your portion to pay as a buyer is $1,335
If the house was worth $301,000...you would've paid 1.35% of $1000 more..which translates to $135
..and finally, in Montgomery County appreciates the fact that you the buyer intends to use this house as your principal residence..for that reason the State of Maryland gives you back $890 for living in our great state!
Your real estate should provide you with a Closing Disclosure prior to going and signing the documents
This closing Disclosure (CD) is prepared by the title company that is performing the closing of your purchase.
The Closing Disclosure (CD) is a statement of the final loan terms and closing costs and this form contains:
Loan Terms Disclosure
This part of the CD will show you the exact loan amount...
Interest Rate Charges
The exact interest rate your lender is charging you
Monthly Principal & Interest
Your monthly principal & interest payment amount that you are expected to pay on a monthly basis minus insurance and taxes.
Mortgage Insurance
If you are paying LESS than 20% down payment, your lender will require you to pay for mortgage insurance. Your lender wants to make sure they will get paid, no matter what happens to you. You will pay for the insurance and they get the benefits in case you default on your loan. A typical Mortgage Insurance premium is added to your monthly principal & interest payments. Your portion to pay on a monthly basis will range somewhere between the $200 to $300 range for a $300,000 house.
Estimated Escrow Amounts
An escrow is a portion of money kept by your lending institution to pay for property taxes during the year. They generally hold on to this money until it is due and they will pay it for you. If the yearly taxes on your $300,000 house is $3,000, your lender wants you to pay $3000 in 12 months increments. Meaning that you must add to your monthly principal & interest payment the escrow for your taxes.
If your taxes are $3,000 per year...your portion to pay on a monthly basis will be $250 more per month - This is in addition to your regular mortgage payment and your mortgage insurance.
There are other escrows amounts that you may be required to pay...like special assessments or HOA Extra Charges - Check with your agent and ask specifically, "Are there any special assessments or other charges that I have to pay on a monthly basis for this property? "
Homeowners Insurance
We are not finished yet with your monthly mortgage payment. You have to pay Homeowners Insurance as well. Thi sis typically paid by your lender to the insurance company. They want to make sure, if your house burns down, the lending institution will be protected of its investment and they want the house replaced.
Another factor: The CLUE report is used by insurance companies to monitor "problem properties" The CLUE report determines if you will pay a higher premium or not. If the previous homeowners of the house had several property claims for fixing and repairs...you will have to pay a higher premium for insurance on that house.
Your portion to pay on a monthly basis for homeowners insurance is based on the value of the house, what it costs to replace it and if you bundle it with other insurance like your car ...etc Typically for a $300,000 home, expect to pay around $1000 to $1500 per year. This will add up more or less another $100 to your monthly mortgage payment
HOA / CONDO Dues
If you are buying a condo, townhouse or a single family home. Typically inMontgomeryy County you are going to be part of a homeowner's or condo association and you will be required to pay for this on a monthly basis. Your portion to pay on a monthly basis will range as little as $30 per month and as high as $1000 or more for some condos in Bethesda | Check with your real estate agent about this prior to signing a purchase contract.
Broker Compensation
If you are the buyer, you should not . . . . .
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