How Much Are Closing Costs in Maryland in 2025?

Closing on a home purchase or sale involves more expenses than just the property’s sale price. Various fees and costs, collectively known as closing costs, are added on and must be accounted for by both the buyer and seller.

For Maryland homeowners looking to sell their properties or prospective buyers searching in the state, understanding these closing costs is crucial.

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Average Closing Costs in Maryland

According to a recent survey from RealEstateBees, the average closing costs range from 3% to 10% when selling with a realtor, and 1% to 6% in a FSBO sale. For buyers, the closing cost ranges from 3% to 6% when buying with a Realtor, and 1% to 6% in a FSBO sale. 

Based on Maryland’s median sale price in April, which was $430,700, the seller’s closing cost can average $22,000, and $12,000 for the buyer’s closing cost.

Factors That Influence the Total Amount of Closing Costs

Several factors can influence the total amount of closing costs in Maryland. These include:

1. Home Price: The price of the home is a significant factor that affects the amount of closing costs. The higher the home price, the higher the closing costs will be.
2. Location: The location of the property can also affect the closing costs. Different counties in Maryland may have different tax rates and fees.
3. Loan Size: The size of the loan can affect the closing costs. Larger loans may have higher origination fees and other associated costs.
4. Type of Loan: The type of loan can also influence the closing costs. For example, FHA loans typically have higher closing costs than conventional loans.
5. Negotiations: The buyer and seller can negotiate who pays certain closing costs. Some sellers may offer to pay certain buyer closing costs to sweeten the deal or sell their home faster.
6. Services Required: The number and type of services required for the closing process can affect the closing costs. These services can include home inspections, appraisals, title searches, and more.

What Closing Costs Actually Cover

For starters, there are the bedrock lender charges like origination fees, processing fees, and underwriting costs. These can reach 1% of the loan amount on their own. Then you have the third-party services that both buyer and seller end up covering in separate portions like:

• Title searches and insurance policies
• Home inspections and appraisals
• County recording and transfer taxes/stamps
• Escrow account funding
• Homeowners association transfer fees
• Courier and mailing charges
• And other miscellaneous processing expenses

What are Closing Costs?

Closing costs are the mandatory fees and expenses that get added to real estate transactions during the final transfer of ownership and property titles. They cover a variety of services required to authenticate and legally facilitate home purchases and sales.

For buyers taking out a mortgage, these costs add up quickly on top of their down payment and future mortgage bills. Sellers, meanwhile, have to account for closing costs eating into their sales profits before ever seeing that money hit their pockets.

Components of Closing Costs in Maryland

Let’s break down some of the major components both buyers and sellers can expect in a  closing cost:

1. Title Service Fees:

Before any property can legally change ownership, a thorough title search must be conducted by title companies. This process verifies the sellers have a “clear title” to the home with no outstanding claims or liens like unpaid mortgages. 

The fees also uncover easements, boundary disputes, or other title defects that could complicate the sale. After completing the search, buyers then must purchase the lender’s title insurance policies to protect against future claims on the title.

2. Government Recording Fees  

Another unavoidable cost covers the county clerk’s fees to officially record the transaction’s paperwork and deed into public records. There are also state and local transfer taxes assessed on the total sale price to fund things like education, public transit, and more.

3. Homeowners Association Transfer Costs  

Properties located within Homeowners Associations come with additional documentation and transfer fees applicable to new owners joining the HOA.

4. Appraisal Costs

Lenders require thorough appraisals from certified professionals to validate the property’s market value and finalize the loan’s terms. This protects them from overextending too much money.

5. Loan Origination Fees

These cover the lender’s direct costs to underwrite and process loan applications, order credit checks, pull employment verification, and more. The total origination fees can range from 0.5% to over 1.5% of the total mortgage amount.

6. Discount Points

Some buyers also choose to pay mortgage discount points upfront, which are essentially prepaid interest charges used to buy down the loan’s interest rate over the full term. Each point costs 1% of the loan but can make a mortgage more affordable monthly.

7. Mortgage Insurance   

The Consumer Financial Protection Bureau states that if homebuyers place a down payment of less than 20% of the purchase price, they are required to pay monthly private mortgage insurance premiums over the mortgage’s life. Many opt to pay this premium upfront during closing to reduce their ongoing bills.

In general, buyers are responsible for covering any costs directly related to originating their mortgage if getting one. Sellers primarily cover property transfer costs like title searches, deed recordings, taxes, and owner title insurance policies.

Seller’s Closing Costs in Maryland

In Maryland, the seller’s closing costs are typically around 3%-6% when selling with a Realtor and 1%-6% when selling ‘by owner’. Here’s a breakdown of the typical closing cost obligations Maryland sellers need to prepare for:

Realtor Commissions

The largest closing cost expenditure for Maryland sellers is real estate agent commissions. While these commissions are technically negotiable, offering below-market rates may dissuade quality agents from taking the listing. That could lead to the home lingering and netting lower offers. 

Title Services and Transfer Fees

The next major closing cost obligations for Maryland sellers come from title company services and state/county transfer fees. This fee averages around 8.3% of the total closing cost and the transfer taxes are 16.7% of the closing cost. 

Attorney Fees

While not legally mandatory, hiring a real estate attorney to oversee the paperwork and contractual components of the transaction provides an extra layer of protection. They average 8.3% of the closing cost.

Homeowners Association Charges

For properties located within an HOA community, there are fees the seller must pay for transferring membership, documentation, and handling turnover procedures with the new homeowner. 

Tips on How Sellers Can Manage or Reduce These Costs

Some sellers avoid steep commissions altogether by marketing homes themselves using low-cost flat-fee MLS listing services. Or they use non-traditional discount brokerages offering pre-negotiated low commission rates. 

Leverage Home Sale Assistance Programs

For sellers struggling with closing cost affordability, numerous down payment and closing cost assistance programs exist at local and state levels to explore. Income-qualified homeowners may receive grants or low/no-interest loans to cover portions of unavoidable closing costs while selling.

Buyer’s Closing Costs in Maryland

For homebuyers in Maryland, closing costs represent the accumulated fees and expenses required to legally finalize and settle your mortgage loan along with transferring the property’s ownership. The common expenses for buyers include:

Lender Charges

Making up the largest portion are lender fees to facilitate and underwrite the mortgage loan itself. These include:

• Origination Fees: Covering the lender’s costs for processing the application, employment verification, and preparing approval documentation
• Underwriting Fees: Additional charges for the underwriter analyzing borrower risk profiles 
• Points: Prepaid interest fees some buyers opt for to lower mortgage rates

Home Assessments 

Then you have the third-party assessment and evaluation services lenders require:

• Appraisal Fee: Paying certified appraisers to provide formal valuations of the property being purchased
• Property Inspection Costs: Hiring inspectors to ensure the home’s condition is thoroughly documented
• Survey Fee: Paying for official land surveys to confirm boundaries and potential easements
• Credit Report Fee: Covering costs for lenders to pull borrower credit profiles and scores

Title and Insurance Charges

A significant closing cost comes from purchasing lender’s title insurance policies that validate the home has no outstanding ownership claims or defects. Expect to pay:

• Title Search: Fees for companies researching public records to certify clean title history
• Lender’s Title Policy Premium: Upfront costs for the new title insurance covering the lender’s interests

Other Miscellaneous Fees

You’ll also encounter a variety of smaller processing and documentation charges like:

• Attorney Fees: If an attorney facilitates paperwork and loan closings on the buyer’s behalf
• Courier/Delivery Fees: Costs for shipping documents between various parties 
• Home/Pest Inspection Costs: If inspections uncover repair needs that require contractor estimates
• HOA Fees: Transfer or initiation costs for homes with homeowner’s association involvement
• Local/State Tax Charges: Any state, county, or municipal tax stamps or transfer taxes assessed

When you start totaling all of these various fees, you can see how closing costs rapidly climb into the thousands of dollars for Maryland homebuyers. And the higher the property’s value or loan amount, the more exponentially these costs increase.

How Buyers Can Negotiate and Potentially Lower These Costs

Options that exist for buyers looking to reduce the impact of closing costs in Maryland:

Request Seller to Pay Some of The Closing Costs

One very common approach for trimming expenses is negotiating with the seller to pay for some closing costs during the offer and contract phases. These seller concessions can slash thousands of buyers’ bottom-line closing cost obligations.

Compare Lenders and Loan Programs

Another smart strategy is diligently shopping different lenders and their loan programs to find the most buyer-friendly terms. Lenders and mortgage products vary substantially in areas like:

• Origination fee percentages charged
• Requirements for purchasing mortgage points
• Whether certain processing/underwriting fees can be waived
• If credits or rebates get offered to offset closing costs

Buy Down Mortgage Rates with Points

Some buyers choose to purchase mortgage points through lenders. Each point costs 1% of the mortgage amount but permanently reduces interest rates by around 0.25%.

Leverage Homebuyer Assistance Programs

Many of these programs offer income-qualified borrowers grants, forgivable loans, or tax credits that can be allocated specifically toward closing costs. Government and non-profit organizations oversee these initiatives to help make homeownership more accessible

FSBO and Closing Costs

For homeowners looking to maximize their profits from a sale, the idea of going the FSBO route certainly holds some appeal. Sellers can potentially save thousands by avoiding paying hefty realtor commissions by taking on the responsibilities of a real estate agent themselves.

Specific Closing Costs Associated with FSBO Transactions

In an FSBO transaction, the seller can expect to pay many of the same closing costs as in a traditional sale, minus the real estate commission for a listing agent. Here are some of the specific closing costs associated with FSBO transactions:

• Title Service Fees
• Transfer Tax
• Recording Fees
• Attorney Fees
• Buyer’s Agent Commission: Even without paying a listing agent’s commission, FSBO sellers may still need to cover the 2-3% fee traditionally paid to the buyer’s agent who represented the other side of the transaction.  

Challenges and Considerations for FSBO Sellers in Managing Closing Costs

Between absorbing FSBO closing cost responsibilities and investing your time and efforts in properly marketing their home, you start to question whether going the FSBO route is worth the headache. Some primary FSBO drawbacks to consider include:

• Lack of experience in pricing homes strategically to maximize sale values
• Ineffective online/offline marketing reach compared to agent MLS/networking abilities
• Time and stress of coordinating showings and face-to-face buyer negotiations alone
• Risk of making costly errors in contracts and paperwork without agent protection
• Responsibility for vetting prospective buyers’ qualifications and commitment personally
• Buyers potentially receiving discounts from you to offset the absence of their agent fees

Making FSBO Work For You

Still determined for those lucrative commission savings? Here are a few tips to make FSBO home sales go as smoothly and economically as possible:  

• Get pre-qualified FSBO closing cost estimates from title companies and lenders upfront
• Request closing cost credits or fee trade offs if negotiating repairs for buyers
• Consider flat fee MLS services to increase visibility without a full listing commission
• Ensure pristine home preparation/staging quality to create fast buyer interest
• Flex your personal networks and social media promotion abilities extensively
• Budget for potentially negotiating partial commissions with buyer’s agents
• Most importantly, consult an experienced real estate attorney periodically to avoid legal pitfalls

Strategies to Reduce Closing Costs

For sellers, closing costs chip away at that hoped-for windfall from their home’s sale price. Buyers need to amass even more cash beyond their down payment just to cover closing expenses. Either way, it’s money you’d undoubtedly prefer to keep in your own pockets.

Here’s a look at effective closing cost reduction strategies worth exploring whether you’re on the selling or buying side of a real estate transaction.

Strategies for Sellers

While some closing cost obligations like transfer taxes are essentially unavoidable for sellers, other major fees provide more wiggle room:

Provide Vendor Optionality

In some transactions, sellers are obligated to pay for services like title searches, homeowner’s insurance binders, and escrow processing. However, you can often request to use your own chosen providers for these services versus default options which could carry inflated fees.

Explore Discount Brokerages

Finally, some sellers explore flat-fee MLS listing services or discount real estate brokers who operate with lower overhead and commission payout structures. These non-traditional routes involve more limited services but can facilitate home sales while incurring minimal or no realtor fee closing costs.

Strategies for Buyers

Just as sellers have opportunities for closing cost reductions, homebuyers should also diligently explore ways to minimize these charges:

Credit/Fee Exchanges

Just as buyers often request loan cost concessions from sellers, you can negotiate concessions from lenders as well. Some originators may be willing to waive or reduce specific fees in exchange for conditionally locking higher interest rates or premium upfront costs like discount point purchases.

Don’t Pay for Unwanted Services

Other times, loan estimates include charges for services you may not necessarily require based on your circumstances. Don’t pay for pest inspections, property surveys, or additional appraisals you didn’t request, reject those service fees entirely during negotiations.

No-Closing Cost Programs

Certain lending programs offer “no closing cost” options where your loan originator bundles all estimated fees into your overall mortgage amounts in exchange for higher interest rates over the full loan term. While avoiding upfront closing costs entirely, you’ll need to crunch the long-term interest expense projections to validate the tradeoff works in your favor.

Stay Sharp and Persistent  

At the end of the day, the most successful homebuyers and sellers intelligently allocate time and effort towards scrutinizing and negotiating every possible closing cost fee they encounter. No opportunity for savings should be dismissed or viewed as negligible.

Sellers can potentially reduce costs by negotiating realtor commissions, using discount brokers or flat-fee MLS services, and exploring down payment assistance programs. Buyers can negotiate lender fees, only pay for needed services, consider no-closing cost loan options, and leverage homebuyer assistance programs.

Scrutinizing and negotiating every fee is crucial for minimizing closing costs. If you want to avoid closing costs altogether as a seller, consider using iBuyer.com to get an all-cash offer and sell your home without closing costs.