Loan Estimate Challenges
Maryland’s Biggest LE Challenges

When it comes to preparing a TRID Loan Estimate (LE) there might not be a trickier state for your transaction than Maryland, with its myriad of wrinkles and various, differing taxes and requirements. First thing’s first. If you make a mistake, it will likely be a big one if the deal is in Maryland. That’s because Maryland is consistently among the top ten states in the nation for total tax burden. So a missed or miscalculated tax can create a significant curative issue.

Maryland’s Transfer Taxes 

Unlike many states, Maryland’s transfer tax varies county by county. But that’s not all. Those rates are subject to change relatively frequently. But not all at once, in unison. Nor will changes necessarily be in the same amount. And then there’s Prince George’s County, which uses a unique tiered rate based on the consideration of the home.

In Maryland, it’s the buyer who pays the transfer tax, which requires another disclosure. As anyone who’s ever prepared an LE knows, this is a little trickier than how a seller-paid tax is handled.

Mortgage Recording Taxes/Mortgage Recordation Taxes in Maryland

Maryland is also a bit unusual among the 50 states because it collects both a mortgage recording tax and a mortgage recordation tax. That’s something only 10 to 15 other states do. But there are also a number of state-mandated discounts of which the preparer of an LE must be acutely aware. Be aware of the first-time homebuyer discount. Also, note a principal residence discount, but know that this discount is not uniformly applied at all times. Sometimes, the discount only applies to the buyer; while at other times, it’s applied equally to the buyer or seller.

The Bottom Line for Maryland

It’s not uncommon for a residential purchase transaction in Maryland to contain four to six lines of taxes—both state and county. The taxes are significant, so any mistake or omission could carry some significant weight in the curative process. In fact, more than a few clients tell us that it’s the complex tax structures of a place like Maryland that led to them to invest in LodeStar’s Closing Cost Calculator in the first place. Now you can see why.

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