Closing Process · August 21, 2026 · 9 min read
Last Tuesday, twenty minutes before settlement in Bel Air, my buyer called me in tears.
"There's an $842 charge I've never seen. My loan estimate didn't have it. The title company says it's normal. I don't have $842 sitting around—I'm tapped out."
We were closing on a cute rancher off Churchville Road. She'd done everything right: got pre-approved, reviewed her Loan Estimate, wired her down payment three days early. And still, one line on the settlement statement nearly killed the deal.
The line? A prorated county tax credit to the seller. She owed it. It wasn't new—it had been on her Closing Disclosure for three days—but she'd never scrolled down to page two, and her lender hadn't walked her through it during their "review" call.
We worked it out. The seller agreed to cover half as a closing cost credit, and she moved some money from savings she'd earmarked for furniture. But the lesson stuck with me: nobody teaches buyers how to actually read a settlement statement before they're sitting at the table with a notary staring at them.
So let's fix that.
First, vocabulary. In Maryland and DC, we say "settlement." In Pennsylvania and Delaware, you'll hear "closing." Same thing: the day you sign a small forest's worth of paper and the house changes hands.
You'll sit down with a settlement attorney (Maryland and DC require one) or a title company closer (common in PA and Delaware). The seller sits in a different room or comes at a different time—this isn't a negotiation anymore, it's paperwork.
Your attorney or closer will walk you through two big stacks: your loan documents (if you're financing) and the settlement statement itself. The settlement statement is the money map. It shows every dollar that's changing hands and why.
Since 2015, most buyers get a Closing Disclosure (CD) at least three business days before settlement, thanks to federal TILA-RESPA rules. It's supposed to match your final settlement statement. Supposed to. HUD's TILA-RESPA resources explain the timing rules, but here's the real talk: always compare the CD you got three days ago to the settlement statement you're signing today. Line by line.
Let me walk you through the categories that trip up my buyers in Harford County, Baltimore County, Montgomery County, and across the Maryland-DC-PA corridor.
Top of the page. Easy. If you're buying a $350,000 home in Havre de Grace and putting down 10%, you'll see $350,000 on one side and $35,000 on the other.
If you're financing $315,000, that number shows up as a credit to you (the lender is giving you money) and a debit later when you pay closing costs.
Here's where my buyer got stuck.
Maryland property taxes are paid in arrears—you pay in July for the period covering the previous twelve months. So if you're buying in August and the seller has lived there since January, they owe roughly eight months of tax that hasn't been billed yet.
You, the buyer, will eventually pay that full tax bill next summer. So at settlement, the seller reimburses you for their portion. That's a credit to you.
But if the seller pre-paid taxes (say, through an escrow account that got ahead), you owe them a prorated credit. That's a debit to you. That's what happened to my Harford County buyer: the seller's escrow had overpaid, and she owed $842 to true it up.
Confusing? Yes. Normal? Absolutely. Maryland's Department of Assessments and Taxation explains the arrears system, but your settlement attorney should walk you through the actual math at closing.
In Pennsylvania, taxes work similarly in York and Lancaster Counties, but some townships bill differently—always ask. In DC and Delaware, you'll see the same prorations but sometimes on different cycles.
Maryland charges both a state transfer tax and a county recordation tax when property changes hands. As a Maryland realtor working across eight Maryland jurisdictions plus DC, PA, and DE, I see wide variation.
Maryland state transfer tax: 0.5% of the purchase price.
Local rates vary:
In Washington DC, the transfer tax ranges from 1.1% to 2.9% depending on property value, and it's typically split between buyer and seller by custom (not law). DC's Office of Tax and Revenue publishes the current brackets.
Pennsylvania calls it a transfer tax, and in York and Lancaster Counties it's usually 2% total (1% state, 0.5% county, 0.5% local), split 50/50 between buyer and seller unless your agreement says otherwise.
Delaware has no transfer tax on the buyer side for owner-occupied homes under certain thresholds, but there is a 2-4% for the seller depending on value. New Castle County adds a small additional fee.
Who pays what? It's negotiable in your purchase contract. I've seen sellers in a tight market refuse to pay a dime. I've seen buyers in Cecil County ask the seller to cover the whole tab when inventory was high. Custom varies by state and leverage.
You'll see two policies: lender's title insurance (required if you have a mortgage) and owner's title insurance (optional but smart).
In Maryland, the lender's policy might run $1,000–$2,000 depending on loan size. The owner's policy is often bundled at a discount. I've never told a client to skip owner's title insurance—too many old liens and boundary surprises pop up, especially in Harford and Cecil Counties where some parcels date back to land grants.
Maryland and DC require an attorney. Expect $400–$800 in the Baltimore-Washington area, sometimes more in Montgomery County. In Pennsylvania, title companies often handle closings, and the fee structure is a bit different—sometimes a flat closing fee instead of an attorney's hourly draw.
None of these alone is huge. Together, they can add $2,000–$4,000 you didn't budget for if you only looked at the down payment.
Three days before settlement, when you get your Closing Disclosure:
Day of settlement:
If something on the settlement statement doesn't match your CD and nobody warned you, stop. You have the right to ask questions. I've delayed closings by an hour to get answers. Better than signing something you don't understand.
The $842 surprise was minor compared to a closing I handled in Anne Arundel County two years ago. The title company miscalculated the county transfer tax—off by $1,800. We caught it because the buyer's mom (a retired accountant) was in the room and did the math on her phone.
We delayed thirty minutes while the title company corrected the HUD-1. Seller wasn't happy. Buyer was grateful she brought her mom.
I also had a DC closing where the seller's outstanding water bill—$340—wasn't caught until settlement day. In DC, unpaid water bills can become liens that survive the sale. We had to escrow $500 until the seller cleared it, which delayed recording by two days. DC Water's lien search tool is public, and I now check it myself during due diligence for every DC transaction.
If you're working with me as your Harford County realtor or across any of my licensed states, I'm ordering that title work early and reading the preliminary settlement statement days ahead. I learned that in the classroom during my teaching years: catch mistakes during the draft, not the final exam.
Sellers get a settlement statement too, and it's usually happier reading—money coming in instead of going out.
But sellers pay:
The number at the bottom—"net proceeds to seller"—is what they walk away with. I've seen sellers shocked that a $400,000 sale nets them $82,000 after a big mortgage payoff. That's why I run net sheets before we list, whether you're looking to sell your house in Baltimore County or downsize from a Charles County estate.
With mortgage rates hovering around 6.65% (per last week's data), buyers are stretching to afford homes across Maryland, DC, Pennsylvania, and Delaware. Closing costs that would've been a rounding error in 2020 now blow budgets.
I'm seeing more buyers ask sellers to cover costs, more lender credits to buy down rates (I wrote about rate buydowns here), and more creative financing to keep deals alive.
The settlement statement is where all that creativity shows up in black and white. If you don't understand it, you can't know if you got what you negotiated.
I don't hand clients a closing disclosure and say "see you Tuesday." We schedule a call. I share my screen. We go line by line. It takes twenty minutes and saves thousands in mistakes and stress.
If you're buying or selling a home in Harford, Cecil, Baltimore, Howard, Anne Arundel, Montgomery, Charles, or Prince George's County—or across the line in DC, York, Lancaster, or New Castle County—I'm happy to do that for you.
Browse current listings here or reach out if you've got questions about what closing costs look like for your specific situation.
Nobody should cry twenty minutes before settlement. Let's make sure your closing is the boring, happy kind.
Katrina Kirton Sherrod, REALTOR® · Samson Properties · Licensed in MD, DC, PA & DE · 443-616-9770 · Katrina@kkstherealtor.com
“The best time to buy a home was five years ago. The second best time is after we talk.” — Every honest realtor, eventually