The Quick Read: On a cash-out refinance, the government charges to record your new loan depend on the state and county where the deed of trust is recorded, and “Montgomery County” exists in many states. Some jurisdictions tax the loan amount. Others exempt the balance you already owe and tax only the new money. Maryland’s Montgomery County is used below as one illustration, not as a national rule. Check your own county’s current rules before you budget.
What Are Recordation Costs on a Refinance?
Recordation costs are the charges a government authority collects to put your new loan documents on the public record. On a cash-out refinance, there are two different kinds, and they get mixed up all the time.
Cash-out refinance estimate
The starting figures are an example value with a balance and a cash request in proportion. Replace them with yours.
Editable benchmark: 7.40% as of October 15, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the agency cap on a one-unit principal residence, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a cash-out refinance quote; a cash-out loan is priced by the lender at lock. The cash available is the loan the program cap allows less the balances paid off, before closing costs, which are not included. The HELOC line is the program’s combined loan-to-value ceiling applied to the same value and balance. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages.
The first is a recording fee. It is usually a flat or per-page charge to record and index the deed of trust or mortgage. The second is a recordation tax (or transfer-type tax). It is a percentage charge based on the loan amount. The CFPB’s guide to the Loan Estimate and Closing Disclosure draws the same line. A flat per-page charge is a recording fee. A charge set as a percentage of the loan amount goes in the transfer-tax line. The name your state uses does not decide the category.
That split matters on your paperwork. A recordation tax on loan principal can show up on your disclosure as a transfer-tax-type line, not under recording fees. If you are scanning for one number, you can miss the bigger one.
Why Does Cash-Out Change the Bill?
Cash-out changes the amount of new debt being recorded. A refinance replaces the old balance with a new loan of roughly the same size. A cash-out refinance replaces it with a larger loan. In a jurisdiction that taxes only new money, that difference is the taxable piece.
Across the wholesale programs Lendmire works with, the loan type is set at application. A conventional cash-out refinance is typically written to 80% LTV on a one-unit principal residence, and 75% on two- to four-unit principal residences, subject to lender guidelines. Paying off a second lien that was not used to buy the home also moves a file out of the limited cash-out category and into cash-out. So a deal that looks like a plain rate-and-term swap can end up classified, priced and taxed as cash-out.
Two more things push the taxable amount up:
- The size of the cash you take out.
- Closing costs you roll into the new loan. A bigger loan amount can mean a bigger taxable amount in some jurisdictions.
Lendmire’s cash-out refinance programs page lays out how the equity side of the loan works. The recordation side is a separate local layer on top.
How Does Underwriting Treat a Cash-Out Refinance, Step by Step?
The recordation bill is the last stage of a longer file. Here is the order things happen.
1. Application sets the loan type. The lender classifies the file as cash-out or limited cash-out. That drives eligibility, maximum LTV and pricing.
2. Eligibility clocks are checked. For conventional cash-out, the first mortgage being paid off must be at least 12 months old, counted note date to note date. Freddie Mac’s Guide section 4301.5 uses that same 12-month language. A borrower must also have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards.
3. Appraisal and title work. The lender orders an appraisal to set value and a title search to find liens that must be paid or cleared.
4. The Loan Estimate lists government charges. Recording fees and other taxes appear first under “Taxes and Other Government Fees,” and transfer taxes appear second.
5. Closing documents are signed. If your jurisdiction has a refinance exemption, an affidavit or a recital in the document is usually attached.
6. The settlement agent collects and records. The agent calculates the charges at closing and pays them when the documents are recorded. Recording generally cannot proceed until the required taxes and fees are paid or a qualifying exemption is properly documented.
7. The Closing Disclosure itemizes the result. Fees to record the deed and fees to record the mortgage are shown separately.
Worked Illustration: Maryland’s Montgomery County
Maryland is the one Montgomery County verified for this piece. Use it to see how an exemption-style system works. No rate or dollar figure is stated here because the county sets and changes them.
The exemption. Maryland’s recordation tax statute, Tax-Property §12-108, exempts a new mortgage when it is a refinance by the original mortgagor, with the spouse if applicable, or by the settlor of a trust.
The paperwork. To claim it, the original mortgagor states that status and gives the unpaid principal of the original mortgage being refinanced. That goes in the recitals or acknowledgment, or in an affidavit under oath.
The effect. Montgomery County’s own council committee packet describes it this way: on a refinance, the tax applies to the principal debt above the principal remaining on the original debt. The same packet says the purchase-side $100,000 exemption does not apply to refinancing, second home or commercial transactions.
The rate structure. The packet describes three rate components: a base rate, a school increment and a premium rate. Larger loan amounts can carry higher marginal rates. The county’s 311 page says the current rates took effect on October 1, 2023, and that is the page to check for today’s schedule. See the Montgomery County 311 recordation page.
Here is the plain-language logic. Say your existing balance is replaced by a new loan that is a bit larger. The old balance is exempt. Only the added amount is taxed. If you add closing costs to the loan, those dollars count as added amount too.
Where the Rule Breaks: Edge Cases
The general rule is “tax the new money.” These are the places it bends.
You are not the original mortgagor. The Maryland exemption is written around the original mortgagor. A purchase combined with a refinance is a different fact pattern. Read the statute, and ask your title company.
A spouse is added or removed. Cecil County, Maryland, says that adding or removing a spouse still earns the refinance exemption, with only the new money taxable. Maryland’s statute also exempts transfers between spouses or former spouses.
The loan sits in a trust. The statute covers a refinance by the settlor of a trust. Freddie Mac also treats title in a revocable trust in a special way for its six-month ownership rule. Trust files need extra document review.
The exemption paperwork is skipped. Even an eligible refinance must still have its exemption claim submitted for review. Baltimore City’s finance office says so directly. It also defines unpaid principal balance as excluding interest and other costs or fees, so a payoff statement may show a larger figure than the one you claim as exempt.
A different county, a different form. Prince George’s County, for example, uses its own Finance Affidavit. It bases the tax on the difference between the new loan amount and the unpaid principal balance of the loans being refinanced. Do not assume a form from one county works in the next.
Not a principal residence. Maryland widened its exemption beyond principal residences, but that is a Maryland rule, and the county packet above treats second-home refinances differently on the purchase-side exemption. On the lending side, occupancy decides leverage: conventional cash-out on a second home is typically written to 75% LTV.
Other programs. FHA and VA cash-out have their own occupancy and seasoning rules, and the VA IRRRL is a rate-reduction product that pays off the old balance and allowed costs, not equity. Their handbooks govern, and a loan officer can walk through the fit.
Who Pays, and Can It Be Rolled In?
The borrower pays. On a refinance there is no seller, so the purchase-side habit of splitting these taxes does not apply.
You usually have two options. You can pay the charges in cash at closing, or you can fold them into the new loan. Folding them in raises the loan amount, and in an exemption-style county it can raise the taxable amount too. A higher principal also means a higher monthly payment, so the convenience of financing the cost carries a recurring price. Run each version of the file and compare.
Think of net proceeds this way: cash you receive equals the new loan, minus the payoff, minus every closing cost, including the government charges. Recordation costs come off the top of your equity access. A borrower who wants a specific cash figure should ask for the Loan Estimate to be built around that target.
Why Do the Numbers Move Between Estimate and Closing?
Federal disclosure rules generally let some closing costs rise by up to 10 percent from the Loan Estimate to closing. Bankrate’s closing disclosure explainer lists recording fees among them, and says transfer taxes cannot increase. Because a percentage-based recordation tax can sit in the transfer-tax line, which line your local charge lands on matters.
Practical habit: put the Loan Estimate and the Closing Disclosure side by side and read the “Taxes and Other Government Fees” block line by line. If a government line grew, ask the settlement agent why.
Other reasons a figure shifts:
- The loan amount changed after appraisal or after you chose to roll in costs.
- The payoff balance changed with the closing date.
- An exemption was not claimed correctly in the documents.
- A county updated its rate schedule.
Common Misconceptions
“A recording fee and a recordation tax are the same thing.” No. One is flat. The other is a percentage of the loan.
“A refinance is always exempt.” No. An exemption has to be claimed in the documents and verified.
“The tax hits the whole new loan.” In an exemption-style county, it generally hits only the amount above the old balance. Older articles and agent posts sometimes say otherwise and describe superseded rate rules. Always confirm against the current county rules.
“The purchase exemption carries over.” It often does not.
“Paying off any second mortgage keeps it limited cash-out.” Only a second lien used to purchase the property qualifies. Anything else makes it a cash-out refinance.
“The estimate is final.” It can move within tolerance.
Key Terms Defined
Recording fee: A flat government charge to record and index your loan documents.
Recordation tax: A percentage-based government charge on the loan amount, which may appear on your disclosure as a transfer-type tax.
Original mortgagor: The borrower who signed the mortgage now being refinanced.
Unpaid principal balance: What you still owe on the old loan, not counting interest, costs or fees.
New money: The part of the new loan above the old unpaid balance.
Cash-out refinance: A new mortgage larger than the one it replaces, with the difference paid to you.
What Does the Decision Look Like in Practice?
Start with the goal. If you need a specific amount of cash, work backward: target cash, plus payoff, plus all closing costs, including recordation. That total is your loan amount, and it has to fit under the LTV cap for your occupancy type. Eighty percent is the typical conventional ceiling on a one-unit primary home. A wholesale lane can reach 89.99% LTV with no mortgage insurance at a 680 score and a 50% ratio on a thirty-year fixed, primary residence, conforming balance, subject to its own six months of seasoning. Not every file fits it. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Then check three things in order:
1. Does your county tax loan principal at all, and does it exempt the old balance?
2. Do you qualify as the original mortgagor, and is the home your principal residence?
3. Is the affidavit or recital ready before closing?
If the answers are clean, the recordation line is predictable. If any is unclear, ask your title company before you sign, not at the table.
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. For another cost comparison, see Lendmire’s piece How Much a Home Equity Loan Costs Next to a Cash-Out Refinance.
Frequently Asked Questions
Is recordation tax charged on my whole new loan or only the cash-out amount?
It depends on the county. Where a refinance exemption exists, as in Maryland, the tax generally applies to the amount above the unpaid balance of the old loan. Where no exemption exists, the whole loan can be taxed. Check your county’s current rules.
Does the same Montgomery County rule apply in every state?
No. Montgomery County exists in many states, and each state and county sets its own recording charges. The Maryland rules here are one illustration only.
Can I roll recordation costs into the new loan?
Usually, yes, subject to lender guidelines and the LTV cap. Rolling them in raises the loan amount. In an exemption-style county, that can raise the taxable amount as well.
Where will I see these charges on my paperwork?
Under “Taxes and Other Government Fees” on the Loan Estimate and Closing Disclosure. Recording fees show first, transfer-type taxes second. Deed and mortgage recording fees are itemized separately on the Closing Disclosure.
How long must I own the home before a cash-out refinance?
For conventional cash-out, the loan being paid off must generally be at least 12 months old, and a borrower must have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards. All of it is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB, Guide to Loan Estimate and Closing Disclosure forms
3. Maryland Tax-Property §12-108
4. Montgomery County (MD) Council packet, Bill 17-23
5. Montgomery County 311 recordation page
6. Cecil County (MD) refinance exemption sheet
7. Bankrate, Closing Disclosure explainer
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does a Cash-Out Refinance Require a New Home Appraisal? · How an Appraiser Values Your Home for a Cash-Out Refinance · How to Get Approved for a Cash-Out Refinance on a Second Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.