What exactly are you paying at the closing table in Montgomery County? If you are buying or selling, the list of line items can feel confusing and hard to predict. You want a clear picture of what is typical, what is negotiable, and when you will see exact numbers. This simple breakdown explains buyer and seller closing costs, local items to verify in Montgomery County, and step-by-step ways to estimate your cash to close or net proceeds. Let’s dive in.
What closing costs cover
Closing costs include the fees and prepaid items charged by your lender, title company, local government, and service providers. Some costs are fixed, others are percentage based. A few are prepaid items that fund taxes and insurance.
Who pays what can depend on local custom and your contract. Many items are negotiable, including whether the seller offers credits toward buyer costs.
Buyer closing costs
Lender fees
Your lender may charge origination, application, processing, or underwriting fees. You can also choose discount points, which are optional fees that reduce your interest rate. Expect smaller items for things like credit reports or flood certifications.
Third-party fees
These are services your lender or you may order. Common examples include the appraisal, home inspection, pest inspection if required, and sometimes a survey. Your title company’s settlement fees are often listed here as well.
Title and escrow
You will see charges for the title search, settlement or closing fee, and document prep or wire fees. If you have a mortgage, a lender’s title insurance policy is required. An owner’s title policy is optional but typically recommended.
Recording and taxes
Maryland and Montgomery County charge fees to record your deed and mortgage. Transfer and recordation taxes may apply. Your contract determines how these are divided between buyer and seller, and some exemptions or credits may be available.
Prepaids and escrows
You will prepay interest from your closing date to your first mortgage payment. You may pay your first year of homeowners insurance or a deposit. Your lender may collect initial escrow reserves for taxes and insurance.
Reserves your lender requires
Many loans require an escrow account to hold future tax and insurance payments. The initial deposits increase your cash needed at closing but reduce future payment shocks.
Seller closing costs
Real estate commissions
Commissions are often the largest seller expense and are set by your listing agreement. They are commonly shown as a percentage of the sale price and are split between listing and buyer brokerages, but the amount is not fixed by law and can vary by market and property.
Mortgage payoff
If you have a loan, you will pay off the remaining principal plus daily interest through the payoff date. Your title company also records the release of the lien.
Title and settlement
Sellers pay their share of settlement fees and any conveyance-related charges. In some markets sellers pay for the owner’s title insurance policy, though this is negotiable. Confirm the customary practice in Montgomery County with your title company.
Transfer and recordation taxes
Maryland and Montgomery County impose transfer and recordation taxes on many transactions. Who pays which portion is negotiated in the contract. Confirm the current rates and any exemptions with your title company before you set expectations.
Prorations and adjustments
You will pay your share of property taxes, HOA dues, or condo fees through the closing date. Any agreed repair credits or holdbacks also appear here.
Miscellaneous items
Courier or wire fees, municipal certificates if required, and any outstanding liens or judgments are handled at settlement.
Montgomery County specifics to confirm
Transfer and recordation taxes
State and county transfer and recordation taxes can be significant. Confirm current rates, how they are split in your contract, and whether any first-time buyer credits or exemptions apply.
Recording fees
Expect nominal recording fees per document. Your title company can quote the current schedule used by the county land records office.
Property tax proration
Montgomery County property tax timing affects prorations at closing. Your title company will calculate your share based on the settlement date and the county’s tax year schedule.
HOA and condo documents
Many condo and planned communities require a resale package or certificate of compliance. There is usually a fee and specific timing for delivery. Sellers should order early to avoid delays.
Assistance programs and credits
Maryland or Montgomery County may offer down payment or closing-cost assistance, as well as transfer or recordation tax credits for qualifying buyers. Ask your lender and title company to review eligibility.
Who pays what
Local practice varies and the contract controls. Before you rely on assumptions, confirm the allocation of taxes and title policies with your agent and title company.
Estimate your cash to close
To plan your funds, gather these inputs:
- Purchase price
- Down payment or loan amount
- Seller credits, if any
- Lender fees and points
- Appraisal, inspections, and credit report
- Title and settlement fees, including title insurance
- Recording and transfer taxes
- Prepaid interest and initial escrow deposits
- HOA or condo dues due at closing
Use this simple formula:
- Cash to close ≈ Down payment + Total closing costs – Seller credits – Earnest money deposit applied
- Total closing costs = Lender fees + Third-party fees + Title and settlement fees + Recording and transfer taxes + Prepaids and escrow deposits + Any initial HOA or insurance payments
Ask your lender for a Loan Estimate within three business days of applying, and request a preliminary settlement worksheet from your title company once your contract is ratified. These two documents give you the clearest early picture.
Estimate your net proceeds
Sellers can sketch an estimate with these inputs:
- Sale price
- Mortgage payoff amount and daily interest
- Commissions per your listing agreement
- Title and settlement fees
- Transfer and recordation taxes per contract
- Prorated taxes and HOA or condo dues
- Repair credits, liens, or certificates
Use this simple formula:
- Net proceeds ≈ Sale price – Seller closing costs – Mortgage payoff – Outstanding liens – Commissions – Prorations + Any seller credits received
Ask your title company and listing agent for a preliminary settlement statement after you go under contract. Also request an updated mortgage payoff from your lender that matches your expected closing date.
Timing and disclosures
Loan Estimate
Under federal rules, your lender must provide a Loan Estimate within three business days of your completed application. It outlines your projected interest rate, monthly payment, and closing costs.
Closing Disclosure
At least three business days before closing, your lender must deliver a Closing Disclosure. This is the final, binding rundown of your exact costs and your cash to close.
When to request exact figures
- Buyers: request your Loan Estimate early and a preliminary settlement worksheet as soon as your contract is accepted. Review your Closing Disclosure carefully three business days before closing.
- Sellers: request a preliminary settlement statement after ratification and an updated payoff letter close to your settlement date. Payoff quotes have expiration dates and include daily interest.
Quick buyer checklist
- Compare lender quotes and ask about points, fees, and required reserves.
- Ask your title company for a fee quote that includes title insurance and recording.
- Confirm transfer and recordation tax allocation in your contract.
- Plan for prepaids like interest, taxes, and insurance based on your closing date.
- Keep your earnest money receipt and confirm how it will be applied.
Quick seller checklist
- Request a net sheet from your agent early, then update it after ratification.
- Order HOA or condo resale documents promptly and confirm delivery deadlines.
- Ask your title company to confirm transfer and recordation tax allocation.
- Secure payoff statements from all lenders and resolve any liens early.
- Review your final settlement statement for prorations and credits.
Avoid surprises
- Closing costs vary with loan type, price point, and timing. Properties in HOAs or condos can add document and transfer fees.
- Your closing date affects prepaid interest and some escrow deposits. Ask how different dates change your totals.
- Compare multiple lender and title quotes for clarity on fees and service. Small differences can add up.
If you want a clear, local plan for your numbers and timing, connect with our team. We coordinate with trusted lenders and title partners to help you see accurate figures early and keep your settlement on track. Reach out to Troyce Gatewood & Partners to get started.
FAQs
How much should a Montgomery County buyer budget for closing costs?
- A practical rule of thumb is 2 to 5 percent of the purchase price in addition to your down payment, but your actual total depends on transfer and recordation taxes, lender fees, title insurance, and escrow deposits.
Who typically pays transfer and recordation taxes in Montgomery County?
- The contract sets the allocation and local custom varies, so you should confirm the split with your agent and title company before you finalize negotiations.
Do sellers pay for the owner’s title insurance policy?
- In some markets sellers pay for the owner’s policy, but this is negotiable and practice can vary; ask your title company what is customary in Montgomery County.
When will I know my exact cash to close as a buyer?
- Your exact cash to close appears on the lender’s Closing Disclosure, which you receive at least three business days before settlement.
When will I know my exact net proceeds as a seller?
- Your title company issues a final settlement statement shortly before closing that shows net proceeds after payoff, commissions, taxes, and prorations.
Are there local programs that reduce closing costs?
- Montgomery County and Maryland may offer assistance or credits for qualifying buyers; ask your lender and title company to review options and eligibility early in your process.