Financing and Settlement
Instruments
Maryland typically secures a loan with a deed of trust naming a trustee, though 'mortgage' is used interchangeably in practice. The promissory note is the debt; the deed of trust is the lien. Maryland foreclosure runs through a court 'order to docket,' so it is quasi-judicial, followed by ratification of the sale and an exceptions period.
Loan fundamentals
Conventional (PMI if LTV exceeds 80%), FHA (low down payment, MIP, property-condition standards), VA (eligible veterans, no PMI, VA appraisal), USDA. Know LTV = loan ÷ value; one point = 1% of the loan (prepaid interest); escrow/impound accounts for taxes and insurance; PITI as the qualifying payment.
Settlement and federal overlays
Settlement is handled by a title company, attorney, or escrow agent. Federal rules dominate the paperwork: the Closing Disclosure must reach the buyer at least three business days before consummation (RESPA/TRID), TILA governs APR disclosure, and RESPA's anti-kickback rule bars fees for referrals among settlement service providers. Last-minute changes to fees or terms can force a new three-day review.
Maryland transfer and recordation taxes
The state transfer tax is 0.5% of consideration and is customarily paid by the seller; some counties add their own transfer tax. Recordation tax is charged per $500 (or fraction) of consideration at a state rate plus any county rate, and is customarily a buyer cost, along with title insurance and lender fees. Exemptions and reduced rates exist (refinances, certain first-time buyers), so verify current rates.
Worked example: $400,000 sale → state transfer tax = 0.5% × $400,000 = $2,000, normally a seller charge; recordation tax is computed on 800 units of $500 × the applicable rate.