What Are Closing Costs in Maryland? A Plain-English Breakdown

Apr 8

The purchase price is only part of what you'll pay when buying a home. At settlement, both buyers and sellers pay a separate set of fees — called closing costs — that cover everything from the title search to county taxes. Whether you're buying in Cumberland, Frostburg, or elsewhere in Western Maryland, these costs catch a lot of people off guard.

Here is what to expect.

What Are Closing Costs?

Closing costs are the fees paid to finalize a real estate transaction. They go to the lender, the title company, the county, and other parties involved in the purchase. In Maryland, they're paid at settlement — the meeting where ownership transfers from seller to buyer.

The total typically falls between 2% and 5% of the purchase price, depending on your loan type, the sale price, and the county where the property is located.

What's Included

Title Search and Examination Fee

The cost of researching public records to confirm ownership and check for outstanding liens, judgments, or claims against the property. At Allegany Garrett Titles & Settlements, our searches go back 60 years.

Owner's Title Insurance

A one-time premium that protects your ownership interest if a title defect surfaces after closing — an unknown heir, a recording error, a prior lien that wasn't caught. In Maryland, buyers customarily pay for this policy, though it can be negotiated.

Lender's Title Insurance

Required by your mortgage lender. It protects the lender's interest, not yours. If you purchase an owner's policy at the same time, you'll typically qualify for a discounted rate on the lender's policy — called a simultaneous issue rate.

Settlement or Closing Fee

The title company's fee for conducting the settlement, coordinating all parties, and disbursing funds.

Transfer and Recordation Taxes

Maryland charges both a state transfer tax and a county recordation tax when a property changes hands. On a standard resale, these are split between buyer and seller. First-time buyers may qualify for an exemption on a portion of the state transfer tax.

Prepaid Items

Not fees for services, but funds collected upfront. This typically includes your first year of homeowner's insurance, prepaid mortgage interest from your closing date to month-end, and an initial escrow deposit for property taxes and insurance.

Lender Fees

Origination fees, underwriting fees, or points charged by your mortgage company. These vary by lender and loan type.

Recording Fees

Charged by Allegany County or Garrett County for recording the deed and mortgage in the public land records.

Who Pays What

Maryland closings generally break down like this:

Buyer pays: Owner's title insurance, lender's title insurance, settlement fee, lender fees, prepaid items, and a portion of transfer and recordation taxes
Seller pays: Real estate agent commissions and a portion of transfer and recordation taxes

These aren't fixed rules. A seller may agree to cover some of the buyer's closing costs as part of negotiations — something worth discussing with your real estate agent when you make an offer.

A Note on County Specific Rates

Each Maryland county sets its own recordation tax rate. Whether you're closing in Frederick, Frostburg, or anywhere in between, the figures on your Closing Disclosure will reflect your county's specific rates. Allegany Garrett Titles & Settlements handles closings across the State of Maryland and understands the fee structures for each county.

How to Prepare

Review your Closing Disclosure before settlement day. Your lender is required to provide it at least three business days before closing, and it lists every fee you're expected to pay. If anything looks different from what you were told to expect, ask.

We go through every document with our clients at the closing table. If you have questions before that day, we're happy to answer them.

How Allegany Garrett Titles & Settlements Can Help

At Allegany Garrett Titles & Settlements, title searches and examinations are a core part of what we do. Our team reviews land records across Maryland to verify ownership, identify potential issues, and ensure every transaction closes on a clean title. We work directly with buyers, sellers, lenders, and real estate agents to keep the process moving efficiently and resolve any title defects before they become obstacles at the closing table. If you are buying or selling property in Western Maryland or anywhere else in the state, our team is here to help.

Sabrina Upole