10 Closing Costs | Buyer | Ocean City, MD
What are Closing Costs for a Buyer?
Closing costs are the expenses related to the purchase of real estate paid by the buyer. The closing costs are in addition to the Purchase Price and Money Down.
Quick Math- Closing Costs range from 2.5%-5% of the Purchase Price. I recommend that my clients use 4%, as this allows for fast math when comparing properties. If you are a Cash Buyer, the closing costs will run on the low end of the range. If you’re financing the property and the purchase price is less than $150,000, the closing costs will run on the higher end of the range.
Example- Purchase a Property for $300,000 with 20% down.
- Closing Cost (4%) will run approximately $12,000.
- Money Down (20%) of Sales Price is $60,000
- In this example, a buyer will need $72,000 between Closing Costs and Money Down.
What’s included in the Closing Costs?
Real Estate Taxes Taxes are prorated from the time of settlement to the end of the real estate tax year. Real Estate Taxes are based on the Assessed value of a property, which can be found on the County Website. In Worcester County (which includes Ocean City, West Ocean City, Ocean Pines, Berlin, etc.) the Real Estate tax year runs from July 1st through June 30th. If financed, the lender will most likely Escrow an additional 2 to 3 months.
Property Insurance This is purchased before settlement and shows as a Pre-Paid item on the Closing Disclosure. The lender will most likely Escrow an additional 2 to 3 months.
Transfer/ Recordation Costs Costs covering the recording and transferring of a property. In MD, you are responsible for the State & County transfer taxes, as well as the County recordation tax. The total amount is typically split 50/50 between Buyer and Seller. Great Link to Fee Website
Settlement Fee Charged by Title- this is the charge to cover the cost to host the Settlement, Review Documents, and Collect & Disburse Monies. Each company has its own fee structure, however, a good estimated range is 500-1,000 dollars
Title Abstract Charged by Title- this is a condensed chain of title history. Checking to see if the property has any outstanding liens, judgments, etc. A successful abstract allows the title insurance company to underwrite the property and issue title insurance. The cost for the title abstract is approximately 250 dollars.
Lender Title Insurance Charged by Title (required by lender)- this insurance protects the lender for the loan amount, not the purchase price. The insurance coverage no longer is active once the loan is paid off. Title Insurance Brochure
Owner Title Insurance Charged by Title (optional)- this insurance protects the buyer for the purchase amount. This is a one-time fee and covers the property for the life of the ownership. Title Insurance Brochure
Underwriting Fee Charged by the Lender- this covers their cost of originating, processing, and the closing of a loan.
Appraisal Fee Charged by Lender- this covers the appraisal of the property
Misc. Lender Fees (Credit Report, Tax Service, Condo Questionnaire, Flood Cert.) these are possible fees charged by the lender, depending on the type of property and the type of loan.
To get a complete and accurate estimate for closing costs of a specific property contact your lender.
Mitchell G. David
Mitchell is a 5 star rated sales agent that specializes in Beach Real Estate in MD & DE. His straightforward approach sprinkled with humor has served him well. Its gained him outstanding client reviews and client successes. Check them out for Yourself!