Buying a home in Montgomery County is exciting, but the closing table can feel like a maze of line items. If you are wondering how much cash you need beyond your down payment, you are not alone. The good news: once you know the common fees and local practices, you can plan with confidence and avoid last‑minute surprises. In this guide, you will learn what closing costs include, how much to budget, which items are negotiable, and what is unique to Montgomery County. Let’s dive in.
What closing costs include
Closing costs are the fees and prepaid items you pay at settlement in addition to your down payment. They cover four main buckets:
- Lender and loan charges
- Title and settlement services (including title insurance)
- Government taxes and recording fees
- Prepaid items like property taxes, homeowner’s insurance, and prepaid interest
You will see every item listed on your lender’s Loan Estimate and on the title company’s Closing Disclosure before you sign.
How much to budget in Montgomery County
As a rule of thumb, buyers who finance their purchase should budget about 2% to 5% of the purchase price for closing costs. The low end often applies to well‑priced loans with limited prepaids. The higher end can reflect higher lender fees, larger escrow deposits, or higher local taxes.
Your exact number depends on:
- Loan type and structure (conventional, FHA, VA)
- Your lender’s fee schedule and whether you buy discount points
- How much your lender collects upfront for property tax and insurance escrows
- Local transfer and recordation taxes, and how you and the seller agree to split them
Line‑item breakdown: what buyers typically pay
Below are common items you may see. Actual fees vary by lender, title company, property type, and contract terms.
Lender and loan charges
- Origination or processing fee: Often a flat fee, roughly $500 to $3,000, or up to about 1% of the loan amount.
- Discount points (optional): You can pay points to lower your interest rate. One point is about 1% of the loan amount.
- Underwriting, credit, and report fees: Often $50 to $200 combined.
- Appraisal: Typically about $400 to $800 for a single‑family home, depending on the property and loan.
- Rate lock fee (if any): May be zero or a few hundred dollars.
Title and settlement services
- Title search and settlement/escrow fee: Commonly $500 to $1,500 combined, depending on the title company.
- Lender’s title insurance policy: Protects your lender. Buyers typically pay this one‑time premium.
- Owner’s title insurance policy: Protects your equity. Who pays can vary by local custom and negotiation.
- Recording fees: County charges to record the deed and mortgage. Usually modest, from tens to a few hundred dollars.
Government taxes and transfer fees
- Transfer and recordation taxes: In Maryland, the state and counties charge these when property changes hands or a mortgage is recorded. In Montgomery County, who pays what can follow local custom or negotiation, and certain buyer types may qualify for exemptions or credits. Confirm the current rates and typical split for your specific transaction before you rely on a number.
Prepaid items and escrows
- Homeowner’s insurance: You usually pay the first year upfront. Typical premiums vary, often around $700 to $2,000 in suburban Maryland, but the home and coverage drive the price.
- Property tax escrow and proration: Lenders often collect several months of taxes into your escrow at closing. You also settle up with the seller for the portion of the tax year after closing.
- Prepaid interest: Covers your interest from the day you close until your first payment date. The amount depends on your loan size, rate, and closing date.
Inspections and reports
- Home inspection: Typically $300 to $700.
- Pest/termite inspection: About $50 to $200.
- Radon, well, septic, or survey: As needed, often $100 to $1,000+ depending on the service.
- HOA or condo transfer/resale fees: Often $100 to $400. Responsibility can vary by community and contract.
Miscellaneous
- Courier, notary, document prep, and flood determination: Usually small items. A basic flood determination can be about $20 to $35.
- Survey (if required): Often $300 to $1,000+ depending on size and type.
Montgomery County details to confirm
Local practices can change, so verify the following with your title company, lender, and your agent:
- Transfer and recordation taxes: Confirm the current Montgomery County and Maryland rates, and ask how these are usually split between buyer and seller in the area where you are buying. Some buyers may qualify for exemptions or reduced rates. Your title company will calculate your exact share.
- Property taxes and proration: Ask the title company to show you the estimated tax prorations on your Closing Disclosure. A simple rough estimate is the annual tax divided by 365, multiplied by the number of days you will own the home in the current tax year.
- HOA and condo items: If the property is in an HOA or condo, request the fee schedule and resale package early. Ask whether there are any transfer, move‑in, or capitalization fees due at closing.
- Owner’s title insurance and who pays it: This can vary by neighborhood, price point, and market conditions. Your title company and local agent can tell you the current custom and what you can negotiate.
- Special assessments: Montgomery County properties can have stormwater, sanitary, or other assessments. Your title search will flag these so there are no surprises.
- Closing method: Many local closings allow eRecording and flexible signing options. Ask your title company what is available and how it affects timing.
Sample cost scenarios (estimates only)
Use these examples to set expectations. Your actual costs will come from your Loan Estimate and Closing Disclosure.
- $400,000 purchase price: Estimated buyer closing costs of roughly $8,000 to $16,000 (about 2% to 4%). This range might include lender fees and appraisal, title services and lender’s policy, prepaid taxes and insurance, and recording fees.
- $700,000 purchase price: Estimated buyer closing costs of roughly $14,000 to $28,000. Higher home prices can raise title insurance and escrow amounts.
- $1,000,000 purchase price: Estimated buyer closing costs of roughly $20,000 to $50,000. At this level, title and insurance premiums, plus larger escrows, can push totals higher.
These figures do not include your down payment or optional discount points. If the seller provides a closing credit, your out‑of‑pocket amount can be lower.
Ways to reduce your closing costs
- Compare at least two or three lenders. Request a Loan Estimate from each so you can compare rate, points, and fees side by side.
- Ask for seller help. You can request a seller credit toward closing costs in your offer. The amount you can receive may depend on your loan type and down payment.
- Negotiate local items. In some cases, you can negotiate who pays certain transfer taxes or the owner’s title policy.
- Shop your title company. You can select the title/settlement company. Ask for a sample closing statement to compare fees.
- Time your closing date. Closing later in the month can reduce prepaid interest for that first partial month.
- Review every line. Read your Closing Disclosure carefully and ask questions. Catching small errors protects your budget.
Buyer checklist
- Budget about 2% to 5% of the purchase price for closing costs.
- Apply with your lender and get your Loan Estimate within 3 business days.
- Ask your title company for a sample or early Closing Disclosure a week before settlement.
- Confirm current Montgomery County transfer and recordation taxes and how they are split in your deal.
- Verify the property’s annual tax and estimate your proration with the title company.
- Request HOA or condo resale documents and any transfer or move‑in fees.
- Get homeowner’s insurance quotes to help your lender calculate escrow.
- Ask whether eSigning or eRecording can streamline your closing timeline.
When you will see the final numbers
- Loan Estimate: After you apply for a loan, your lender must send a Loan Estimate within 3 business days. This shows your projected interest rate, payment, and closing costs.
- Closing Disclosure: You must receive your Closing Disclosure at least 3 business days before closing. It itemizes all costs for buyer and seller, including any credits.
- Settlement statement at closing: Bring valid ID and the funds your Closing Disclosure shows, typically by wire transfer as directed by your title company.
The bottom line for Montgomery County buyers
Your closing costs will be driven by your loan, your contract terms, and the local taxes and fees for your property. Plan for 2% to 5% of the purchase price, then tighten your budget with actual quotes from your lender and title company. Ask early about transfer and recordation taxes, HOA or condo fees, and whether any seller credit can ease your out‑of‑pocket.
If you want a clear, local estimate and proven guidance from offer to keys, reach out. Our team will connect you with trusted lenders and title partners, explain each line item in plain English, and help you negotiate the best possible terms. Contact Steven Huffman to get a personalized closing cost breakdown and a step‑by‑step plan for your Montgomery County purchase.
FAQs
How much are buyer closing costs in Montgomery County?
- Most buyers should budget about 2% to 5% of the purchase price for closing costs, excluding the down payment. Your Loan Estimate and Closing Disclosure show your exact total.
What do buyer closing costs include in Maryland?
- They include lender fees, appraisal, title and settlement services, title insurance, transfer and recordation taxes, recording fees, and prepaids like taxes, insurance, and interest.
Who pays transfer and recordation taxes in Montgomery County?
- The split is based on local custom and negotiation, and some buyers may qualify for exemptions or credits. Your title company will confirm the current practice and your share.
What are prepaid items versus fees at closing?
- Prepaids fund future bills, like your first year of insurance, several months of property tax escrow, and prepaid interest. Fees are one‑time charges for services provided at closing.
When will I receive my Loan Estimate and Closing Disclosure?
- You should get a Loan Estimate within 3 business days of applying and a Closing Disclosure at least 3 business days before closing so you have time to review.
Can the seller help pay my closing costs in Montgomery County?
- Yes, you can request a seller credit in your offer. The allowed amount depends on loan guidelines and your down payment. Your agent and lender can set the right strategy.
How can I lower my out‑of‑pocket closing costs?
- Compare lenders, consider timing your closing later in the month, negotiate local items like owner’s title policy or tax splits, and ask for a seller credit if appropriate.
