Who Pays for Closing Costs in Maryland? A Guide for Buyers and Sellers

If you’re budgeting for your next move, it’s important to know who pays for closing costs in Maryland.

The short answer is that buyers and sellers generally share them, but the split depends on the county, loan type, and terms negotiated in the contract. Buyers tend to cover lender-related fees, while sellers handle transfer taxes and agent commissions. However, the details can vary widely from one Maryland jurisdiction to another.

Closing costs are one of the most misunderstood parts of a real estate transaction. Maryland has a unique combination of state requirements, county-specific tax rules, and lender guidelines that can make it hard to predict your final numbers until the contract is signed. This guide explains what these costs include, who usually pays them, what is negotiable, and how you can estimate your expenses early in the process.

Understanding what closing costs include helps set clear expectations.

Closing costs are the mandatory fees required to finalize a home sale and transfer ownership. According to the Consumer Financial Protection Bureau, they include the services, taxes, and processing fees required to prepare loan documents, verify ownership, and record the property with the appropriate state or county authority (Source: Consumer Financial Protection Bureau, “What are closing costs?” https://www.consumerfinance.gov/ask-cfpb/what-are-closing-costs-en-184/)

The total amount varies depending on the location, loan type, and purchase price.

In Maryland, closing costs typically range from 2 percent to 5 percent of the purchase price. A $400,000 home may generate $8,000 to $20,000 in combined buyer and seller closing expenses. The exact amount depends on local tax rates, lender charges, and the complexity of the title work.

Knowing who usually pays closing costs in Maryland helps buyers and sellers budget wisely.

Maryland does not follow a universal statewide rule for dividing closing costs. Instead, individual counties and local customs influence who pays what.

• Buyers usually cover the costs associated with securing their mortgage. These include loan origination fees, application fees, appraisal charges, and lender-required inspections. Buyers also pay for title searches, lender’s title insurance, and recording fees.
• Sellers commonly pay for transfer taxes, recordation taxes, and real estate commissions. These expenses often represent the largest portion of seller-side costs. However, counties like Montgomery, Howard, and Anne Arundel each have their own tax rules, so the final amount can differ based on the property location.

Recognizing what buyers are responsible for clarifies the largest portion of upfront costs.

Buyer closing costs generally include a combination of lender fees, title charges, and prepaid property expenses.

• Lender fees, appraisal costs, and title-related charges make up most buyer expenses.
• Buyers can expect to pay loan origination fees, appraisal costs, credit report fees, underwriting fees, and tax service fees. These amounts vary depending on the loan program.
• Prepaid taxes, insurance, and escrow items also add to the buyer side of the statement.
• Buyers often prepay property taxes, homeowner’s insurance, and interest for the first month of the loan. These items typically go into an escrow account that the lender uses to pay future bills.

Understanding what sellers pay provides a realistic look at net proceeds.

Sellers may pay fewer individual line items, but the total amount is significant because of taxes and commissions.

• Transfer and recordation taxes are often seller-heavy, depending on the jurisdiction.
• Maryland’s Department of Assessments and Taxation notes that transfer and recordation taxes vary by county and may be shared differently depending on local regulations.
  (Source: Maryland Department of Assessments & Taxation, “Transfer and Recordation Taxes” https://dat.maryland.gov/realproperty/Pages/Transfer-Tax.aspx)
• Real estate commissions are typically paid by the seller and represent one of the largest single closing costs. The commission amount is agreed upon when the property is listed and is paid at settlement.

Knowing that many closing costs are negotiable helps both parties navigate the market.

While Maryland has standard practices, most closing costs can be negotiated based on market conditions and the terms of the contract.

• Buyer concessions may be more common in competitive markets. When multiple offers are common, buyers may choose to pay a larger share of closing costs to strengthen their offer. This could include covering a higher portion of transfer taxes or paying for their own inspections and fees.
• Seller credits can help buyers manage cash flow in slower markets. These concessions appear on the settlement sheet as credits that reduce the buyer’s out-of-pocket costs.

Reviewing county-specific tax rules prevents last-minute surprises.

Maryland counties set their own transfer and recordation tax rates, which means the same property price can generate different closing costs depending on location.

• Some counties split these taxes evenly between buyer and seller. Others expect the seller to pay a larger share.
• Before entering into a contract, both parties should check how their county handles these fees to ensure the estimate is accurate.

Because tax rates and cost-sharing rules vary, a title company can provide a county-specific breakdown early in the process. This helps buyers and sellers understand their financial responsibilities before settlement day arrives.

Working with a reputable title company ensures the closing process stays accurate and compliant.

A trusted title company plays a key role in keeping the transaction organized, transparent, and on schedule.

• The title company conducts a detailed title search to ensure there are no outstanding liens or legal issues.
• They prepare closing disclosures, coordinate communication with lenders, and verify that all fees and taxes are correct.

Once a purchase contract is signed, your title company can provide a more precise closing cost estimate. The Maryland Mortgage Program also offers down payment and closing cost assistance for eligible buyers depending on income and property location.
(Source: Maryland Mortgage Program, “Homebuyer Assistance” https://mmp.maryland.gov/Pages/Down-Payment-Assist.aspx).

Getting answers to common questions helps buyers and sellers feel more confident.

1. Do buyers ever ask sellers to cover some of their closing costs?
   Yes. Sellers may agree to concessions that reduce the buyer’s out-of-pocket expenses. Whether a seller accepts depends on local market conditions.

2. Are transfer and recordation taxes always divided?
   No. The split depends on the county and the terms of the contract. Each jurisdiction sets its own expectations.

3. Is title insurance required in Maryland?
   Lender’s title insurance is required for most mortgages. Owner’s title insurance is optional but strongly recommended because it protects the buyer’s property rights for as long as they own the home.

5. Do closing costs vary by county?
   Yes. Tax rates, recording charges, and administrative fees differ from one Maryland county to another. Location may have a significant impact on total costs.
6. How early can I get a closing cost estimate?
   Your lender provides an initial estimate after you apply. Your title company can give you a more accurate estimate once your purchase contract is finalized.

Understanding who pays for closing costs in Maryland is easier when you have clear guidance, accurate estimates, and a team that knows the local rules inside and out. Because each county and loan type is different, working with experienced professionals ensures you know what to expect long before settlement day.

If you would like a customized breakdown of your Maryland closing costs or need support navigating an upcoming real estate transaction, Certified Title Corporation is here to help. Contact us today for reliable guidance and a smooth, stress-free settlement experience.

About Certified Title Corporation: Since 1994, attorney-owned Certified Title Corporation has been furnishing residential and commercial real estate stakeholders across the nation with robust title insurance, settlement, and escrow services. Renowned for its industry-leading reliability and exemplary level of service and quality, the Maryland-based company helps clients from all walks of life achieve their asset goals. To learn more, call (888)486-5511 or visit https://www.certifiedtitlecorp.com/.