Closing day should never feel like a guessing game. If you are buying in Bethesda, knowing your closing costs up front can help you plan with confidence and negotiate with purpose. In this guide, you will learn what closing costs include, who typically pays what in Montgomery County, realistic dollar ranges, and a sample cash-to-close for an $800,000 purchase. You will also get a simple checklist and timeline so nothing catches you by surprise. Let’s dive in.
What closing costs include
Closing costs are the one-time fees and prepayments due when you finalize your purchase. They are separate from your down payment. A helpful rule of thumb is to plan for 2% to 5% of the purchase price, with the exact amount based on your loan, the property, and local taxes and fees.
In Bethesda, closing costs commonly include:
- Lender fees such as origination, discount points, appraisal, credit and processing.
- Title and settlement fees including the settlement charge, title search, endorsements, and title insurance policies.
- Transfer and recordation taxes at the state and county level, plus recording fees.
- Prepaids and escrows such as prepaid interest, the first year of homeowners insurance, and initial deposits for taxes and insurance.
- Inspections, surveys, and any HOA or condo transfer fees required by your contract.
- Miscellaneous items like notary, courier, and attorney fees, if you choose counsel.
Who pays what in Montgomery County
Local custom matters, and contracts control the final answer. In many Maryland transactions, the buyer pays most lender-related fees, lender’s title insurance, inspections, prepaids, initial escrow deposits, mortgage recording fees, and buyer-side settlement charges.
Sellers commonly pay transfer taxes and the owner’s title insurance policy in Maryland. This is common but negotiable. Real estate commissions are typically paid by the seller.
Some items can shift based on negotiations. You may request a seller credit toward your closing costs, and parties can agree on who pays the owner’s title policy or portions of settlement fees. Always confirm the final allocation in your contract.
Typical cost ranges in Bethesda
Use these realistic ranges to budget. Actual figures depend on your lender, loan program, price point, and closing date.
Lender fees
- Origination and discount points: 0.5% to 1.5% of the loan amount.
- Appraisal: $400 to $800.
- Credit, flood, and other small third-party fees: $25 to $300 combined.
- Lender’s title policy: about 0.1% to 0.5% of the loan amount.
- Mortgage recording fee: $50 to $300.
Title and settlement
- Settlement or closing fee: $350 to $900.
- Owner’s title insurance: if the buyer pays, plan for about 0.2% to 0.6% of the purchase price. In many Maryland deals the seller pays this, but it is negotiable.
- Title search, exam, endorsements, and document prep: $150 to $600 combined.
Transfer and recordation taxes
- Maryland and Montgomery County charge transfer and recordation taxes on sales. Combined totals in many Maryland counties often fall in the 1% to 3% range of the purchase price, but exact Montgomery County rates should be verified with the county or a title company.
- Local custom often has the seller pay transfer taxes in Maryland, but this is negotiable.
Prepaids and escrow deposits
- Prepaid interest: roughly $100 to $2,500 depending on rate and closing date.
- Homeowners insurance, first year paid at closing: $700 to $2,000 or more.
- Property tax proration: you may reimburse the seller for taxes already paid for the period you will own the home. Amount depends on assessed value and local rates.
- Initial escrow cushion: lenders often collect about two months of taxes and insurance upfront, sometimes more.
Inspections, surveys, HOA items
- Home inspection plus add-ons: $300 to $1,000 or more.
- Survey if needed: $150 to $700.
- HOA or condo transfer or estoppel fees, if required by contract: $100 to $500 or more.
Miscellaneous
- Deed recording fee: $50 to $200.
- Notary, courier, wire fees: $10 to $100 each.
- Attorney, if you retain counsel: $500 to $1,500 or more.
Sample cash-to-close for an $800,000 home
Below is an illustration for a conventional loan with 20% down. Assumptions: purchase price $800,000, loan amount $640,000, seller pays transfer taxes and the owner’s title insurance policy, which is common in Maryland but not guaranteed.
- Origination and points at 0.5% of loan: $3,200
- Appraisal: $600
- Credit, processing, flood: $200
- Lender’s title policy at about 0.2% of loan: $1,280
- Settlement or closing fee: $500
- Mortgage recording fee: $150
- Prepaid interest, example 20 days at 5%: $1,750
- Homeowners insurance, first year: $1,000
- Initial escrow deposit, two months cushion: $1,800
- Home and pest inspections: $600
- Miscellaneous, notary, courier, HOA estoppel if any: $300
Total estimated buyer closing costs, excluding down payment: about $10,380. That equals roughly 1.3% of the purchase price in this example.
If you use an FHA loan with 3.5% down, expect a higher loan amount and program-specific insurance premiums. Depending on how you handle the upfront mortgage insurance premium, total buyer closing costs often land between about $12,000 and $25,000. Program rules also limit how much the seller can contribute.
How to plan your budget
- Start with the 2% to 5% rule of thumb for closing costs, separate from the down payment.
- Ask your lender for a Loan Estimate within three business days of application. This shows your early closing cost breakout.
- Request a preliminary estimate from a local title company for your specific price point and address.
- Confirm who will pay transfer and recordation taxes in your contract and verify current Montgomery County rates, since these can be material.
- Build a cushion for prepaids and your initial escrow deposit. These are often the biggest surprises.
Quick checklist
- Loan Estimate from at least one lender.
- Title company cost estimate and draft settlement statement.
- Property tax projections for the address, plus HOA or condo transfer fees if applicable.
- Confirmed seller concessions and who pays each major fee in the contract.
- Calendar for closing date and funding so you can plan prepaid interest and escrow timing.
Timeline and what to expect
- Loan Estimate: you should receive this within three business days after your application. Check lender fees, points, and third-party charges.
- Closing Disclosure: you should receive this at least three business days before settlement. This is your final review window to confirm every line item.
- Seller concessions: many loan types limit how much a seller can contribute. Your lender will guide you on caps and how to structure credits.
- Rolling costs into the loan: some costs and premiums can be financed, but transfer taxes and most prepaids usually require cash or a seller credit.
- Wiring funds: always verify wiring instructions by phone using a trusted number, not one from an email. Many title companies also accept cashier’s checks.
Common pitfalls to avoid
- Not clarifying who pays transfer and recordation taxes before you write the offer.
- Underestimating prepaids and the initial escrow deposit for taxes and insurance.
- Skipping title and escrow shopping when allowed. Service and fees can vary.
- Overlooking HOA or condo transfer fees in your budgeting.
- Changing the closing date without checking how it affects prepaid interest and prorations.
Local guidance you can trust
Buying in Bethesda is a high-stakes decision. You deserve a calm, precise plan for your cash to close and a negotiator who protects your interests. If you would like a tailored estimate for a specific property and help structuring credits or timing, reach out to Hugh McDermott for personal guidance from search to settlement.
Ready to run your numbers and move with clarity? Let’s connect with Hugh McDermott.
FAQs
How much should a Bethesda buyer budget for closing costs?
- A practical starting point is 2% to 5% of the purchase price, separate from your down payment. Your Loan Estimate will refine the number for your loan and property.
In Montgomery County, who usually pays transfer and recordation taxes?
- It is common in Maryland for the seller to pay transfer taxes and the owner’s title policy, but this is negotiable. Confirm the allocation in your contract and verify current county rates.
What are prepaids and escrow deposits at closing?
- Prepaids are items you pay in advance, like interest from closing to your first payment and one year of homeowners insurance. Escrows are initial deposits for future taxes and insurance.
Can a Bethesda seller pay some of my closing costs?
- Often yes through seller concessions, subject to loan program limits and market conditions. Your lender can explain caps and how to structure credits.
When will I see my final numbers before settlement?
- Your lender must provide the Closing Disclosure at least three business days before closing. Review it carefully and ask for explanations of any unexpected charges.
How do I safely send my cash to close?
- Confirm wire instructions by phone using a trusted number, not one in an email, to avoid fraud. Ask the title company if a cashier’s check is acceptable as an alternative.
