The Quick Read: Recordation costs add up for a Maryland jumbo cash-out owner in layers, and the biggest layer is a county-set tax on the new money only. A refinance of a principal residence is generally exempt up to the unpaid principal on the old loan. The tax applies to the amount above that balance, and flat recording fees come on top. Your county’s rate, more than your loan size, decides how heavy the bill feels.
Key Takeaways
- Maryland charges recordation tax when a deed of trust is recorded in the land records. The county treasury receives the money.
- On a principal-residence refinance, the exemption covers the part of the new loan up to the old unpaid principal. A cash-out loan is taxed on the excess.
- Rates are set by county. The same new money can cost more than twice as much in one county as in another.
- The exemption is claimed on paper. It is not automatic.
- The appraisal sets your leverage limit. It does not change the tax base, which is the face amount of the loan.
What Is Recordation Tax, and Why Does a Refinance Owe It?
Recordation tax is the charge for putting a document, including a deed of trust, into the land records. The Maryland State Bar Association’s tax guide describes it as a state-authorized tax whose proceeds go to the county treasury. A refinance records a new deed of trust, so the new loan is in scope.
It is not the same as transfer tax. A refinance does not change who owns the house, and mortgages and deeds of trust fall outside the state transfer tax. Recordation tax is the one that reaches your loan.
The tax is figured per $500 of the taxable amount, and any fraction rounds up to the next $500. Rounding adds at most one increment, so it is a small effect. The rate and the taxable base do the heavy lifting.
How Is the Taxable Amount Figured, Step by Step?
The taxable amount is the face amount of the new deed of trust minus the unpaid principal balance of the old loan. Here is the sequence.
1. Payoff. The new loan pays off your existing first lien. The amount by which the new principal exceeds the old principal is your cash-out slice.
2. Exemption. Maryland’s statute, Tax-Property § 12-108, says a deed of trust is not taxed to the extent it secures a refinancing of an amount not greater than the unpaid principal of the existing loan. The property must be a principal residence, and the borrower must meet the original-mortgagor test.
3. Taxable base. The remainder is the taxable amount. “Unpaid principal” excludes accrued interest and other costs and fees.
4. Rounding. The taxable amount is divided by $500 and rounded up.
5. Rate. The county rate is applied to each increment.
6. Paperwork. The exemption is claimed by affidavit or a statement in or with the deed of trust. The county wording can be specific.
Montgomery County says the same thing in its own words. Its Bill 17-23 summary states that on a refinance the tax applies to the principal debt that exceeds the principal remaining on the original debt.
A Percentage Walk-Through
Say your home is worth 100 units and the old balance is 55% of that. You take a new loan at 80% of value. That is within the range a cash-out jumbo can reach, since cash-out leverage sits below purchase leverage on these lanes, subject to lender guidelines.
Only the 25% gap between the new loan and the old balance is taxable. That is about 31% of the new loan. The other 69% is exempt.
A common mistake is to multiply the headline county rate by the entire loan and conclude the bill is unmanageable. That overstates the tax by a wide margin.
Why the County Matters More Than the Loan Size
For the same taxable amount, county rates produce very different bills. A March practitioner roundup from Starfield & Smith lists these rates.
| County | Rate on taxable amount |
|---|---|
| Baltimore County, Howard County | $2.50 per $500 |
| Cecil County, Carroll County | $4.10 per $500 |
| Baltimore City, Harford County | $5.00 per $500 |
| Charles County, Frederick County | $7.00 per $500 |
| Anne Arundel County | $7.00 per $1,000, rounded to the nearest $500 |
| Montgomery County | Tiered, $4.45 per $500 on the first band |
Run the percentage scenario above through two counties. A $7.00 county charges 2.8 times what a $2.50 county charges on the same new money. For a jumbo owner, that gap grows with the cash-out slice.
Montgomery County deserves its own note. Its rate is tiered. The first band is $4.45 per $500, and successive higher bands step up in rate, with the top band at $11.35 per $500. The county’s Bill 17-23 describes a “Recordation Tax Premium” that applies only to the amount above a threshold. In practice, a larger balance meets higher marginal rates on its upper bands.
Counties change their rates. Treat the table as a starting point, then confirm the current rate with your county and with the Loan Estimate. You may also see a statewide figure quoted on some title-company pages. That conflicts with the county tables, because Maryland sets this tax by county, not statewide.
What Else Is on the Bill?
Recordation tax is one line. The full picture includes a few others.
- Flat recording fees. These are charges for filing the document. They do not scale with the loan amount.
- Lender and third-party charges. These cover title, appraisal and similar services. They are separate from anything the government sets.
- Prepaids and escrow deposits. These are your own money set aside for taxes and insurance, not costs of the loan.
- Financed costs. If you roll closing costs into the new loan, the face amount rises above the old balance. Even a no-cash-out refinance could then carry a small taxable slice. Ask your title agent to confirm how your county treats that.
Think of the total as a ledger. One column is the tax on new money. Another is flat recording fees. A third is everything else you pay to close. The tax column is government-set and not negotiable. The other two are worth comparing between lenders.
Where Does the Jumbo Part Change Things?
Jumbo status changes your loan, not the tax rule. A jumbo loan begins one dollar above your county’s conforming limit. That limit varies by county and changes yearly, so check the federal housing agency’s published county table for your own county.
The tax follows the dollars above the old principal, whatever label the investor puts on the loan. Fannie Mae and Freddie Mac can’t buy jumbo loans, so their cash-out definitions don’t bind the lenders. Across the wholesale programs Lendmire places files with, the headline lane works with a 660 decision score, leverage up to 90% on some lanes, and loans up to $5,000,000 on the largest. Every figure is subject to lender guidelines and a full file review. Several lanes stop at 80%, and cash-out comes at lower leverage than purchase. The largest lanes also put a cap on how much cash you can take out.
Here is how the underwriting side connects to the tax side.
- Appraisal. It sets the value, and so the leverage limit. Above a lane’s threshold amount, two appraisals are required.
- Ratio ceiling. The fixed lanes allow up to a 50% debt-to-income ceiling. The adjustable lanes sit at 45%, and the interest-only lanes at 43%.
- Reserves. These are measured in months of the full payment and rise with the loan amount.
- Tax base. The face amount of the loan, not the appraised value, drives recordation tax.
If you are comparing programs, Lendmire’s jumbo cash-out refinance program page shows how these lanes line up by purpose and structure.
How Cash-Out Proceeds Get Reduced
Your net proceeds are what remains after the payoff, the fees and the taxes. The tax is paid at closing or rolled into the loan. Rolling it in raises the principal slightly, which raises the lifetime cost. That is a real tradeoff. Paying at closing keeps the balance lower but uses cash you were hoping to take out.
Think about it by share. If your county is at the high end and your cash-out slice is large, the tax can be a noticeable share of the cash you receive. In a low-rate county the same slice costs much less. Both can still make sense when the cash has a clear job, such as paying off a higher-cost balance or funding a renovation. The point is to price it before you commit, not after.
Our related piece How Much More a Jumbo Cash-Out Costs a W-2 Owner Versus a HELOC walks through that choice. A HELOC is a different loan with its own recording treatment, so the tradeoff can flip depending on your balance and county.
Where the Rule Breaks: Edge Cases
The general rule is simple. The exceptions are where owners overpay or lose the exemption.
- Original mortgagor. The exemption goes to the “original mortgagor.” That may be an individual, someone who assumed the debt, or a trustee of a living trust. Later codifications widen the definition, for example to a person who received the property under an exempt deed. If you bought from someone else and no recordation tax was paid on the consideration, have your title agent confirm you qualify.
- Principal residence only. A second home or an investment property does not get the refinance exemption. Occupancy also changes the leverage a lane allows, so a second-home refinance would be a different conversation entirely.
- Revocable trust. A refinance by a revocable trust can qualify for the exemption, so confirm the trust’s status with your title agent.
- County transfer tax mismatch. The state refinance exemption is not mirrored for county transfer taxes in counties that charge them, such as Prince George’s.
- Purchase exemptions. Principal-residence exemptions on the first slice of a purchase price apply to purchases. They do not apply to your refinance.
- Supplemental instruments. These are exempt except to the extent the debt or consideration increases.
- Loan labels. A lender’s “limited cash-out” label has its own rules about how much cash you can take. Maryland’s tax follows the actual dollars above the old principal, not the label.
Paperwork Checklist
The exemption is not automatic. Gather these before closing.
1. Your old loan’s payoff statement showing unpaid principal.
2. The affidavit of refinancing exemption, or the county’s required wording in the deed of trust.
3. Proof of principal-residence use.
4. Your trust documents, if a trust holds title.
5. The Loan Estimate and Closing Disclosure, compared line by line.
Maryland land instruments also go through an intake sheet that serves the state assessments office and local finance offices. In some counties the tax office collects the tax while the clerk collects recording fees, so two checks may be involved. Your title agent usually handles this, but ask who is doing it.
How to Read Your Loan Estimate and Closing Disclosure
Look first at the section for taxes and other government fees. It lists recording fees and transfer taxes. The CFPB’s guidance on closing costs explains that some charges can change between estimate and closing within set tolerance categories, while others, such as prepaids, can change by any amount.
A loan-amount-based tax may not sit on the same line as flat recording fees. Which line carries it can vary, so ask your lender or title agent where yours appears and how it was calculated. If a tax figure looks like the county rate times your whole loan, ask whether the exemption was applied. Overpayment here is rare but easy to miss.
Common Misconceptions
- “Refinancing in Maryland always triggers full recordation tax.” The exemption covers up to the old unpaid principal.
- “Refinances pay transfer tax.” Transfer tax follows a change of ownership.
- “The exemption is automatic.” It needs an affidavit or statement.
- “There is one statewide rate.” Rates are set county by county.
- “Recording fees and recordation tax are the same.” One is a flat filing charge. The other follows the loan amount.
- “Closing costs can’t change after the Loan Estimate.” Some can, within tolerance categories.
Key Terms Defined
Recordation tax: A county-set tax charged when a deed of trust is recorded, based on the loan amount secured.
Deed of trust: The document that secures your loan against the home in Maryland.
New money: The amount by which the new loan exceeds the unpaid principal on the old one.
Original mortgagor: The borrower who qualifies for the refinance exemption, defined in the statute.
Unpaid principal: The loan balance still owed, not counting interest, costs or fees.
Jumbo loan: A loan that starts one dollar above the county’s conforming limit.
Frequently Asked Questions
Do I owe recordation tax on my whole new loan when I cash out?
Usually not. On a principal-residence refinance, the exemption covers the part of the new loan up to the old unpaid principal. The tax applies to the amount above it. Your county’s rate and your title agent’s reading of the exemption set the final figure.
Does a rate-and-term refinance owe anything?
Often little or nothing, because the new loan roughly matches the old balance. Financed closing costs can push the face amount slightly above the old principal. If so, a small taxable slice may appear. Ask your title agent how your county treats that.
Does the appraised value change the tax?
No. The appraisal sets the value and your loan-to-value limit. The tax follows the face amount of the loan above the old principal. A higher appraisal can let you borrow more, and borrowing more raises the taxable slice.
Can I claim the exemption on a second home?
No. The refinance exemption requires a principal residence. Second-home loans can still be arranged on some jumbo lanes, at lane-specific leverage, but the tax treatment differs.
Where do I confirm the current rate?
Check your county’s finance or tax office, then compare it to the tax line on your Loan Estimate. Counties adjust rates, and the roundup above is a practitioner summary, not a county notice. Your title agent can confirm both.
What Happens Next
Pull your payoff statement, find your county’s current rate, and estimate the taxable slice before you choose a loan amount. If you are weighing leaving a first lien alone against replacing it, our piece Should a High-Earning W-2 Owner Cash Out a Jumbo or Add a HELOC? covers that decision.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. Lendmire’s consumer lending is licensed in 16 states, and Maryland is not one of them, so a Maryland property needs a lender licensed there. The recordation math above applies to any comparison you run.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Maryland General Assembly, Tax-Property § 12-108
2. Montgomery County Council, Bill 17-23
3. Starfield & Smith, Calculating Maryland Recording Taxes
4. CFPB, Can my final mortgage costs increase?
This article is part of Lendmire’s Jumbo Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How Much More Interest a Jumbo Cash-Out Costs on a Texas Homestead · How to Get a Jumbo Cash-Out After a Quitclaim Deed From a Parent · Should a Condo or Co-Op Owner Fund a Remodel With a Jumbo Cash-Out?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.