Delaware Mortgage Loans

When buying a home in Delaware one must be aware of the applicable taxes that must be paid for the transaction.  When a property is purchased in Delaware, there is a 3% transfer tax that must be paid.  It is customary for the tax to be split 1.5% for the seller and 1.5% for the buyer.  It is not a law but it is how most transactions are done in Delaware.  There are some exceptions, for example, Toll Brothers charges the buyer 2% of the transfer tax and they only pay 1%.  This can be a big difference since most Toll Brother homes in Delaware are over $400,000.
The transfer tax is split between the State of Delaware and the county where the property is located.  There are three counties in Delaware, New Castle County, Kent County, and Sussex County.  All three counties waive the transfer tax for first time homebuyers.  First time homebuyers must sign a form that will be filed with the appropriate county in order to have the county portion of the transfer tax waived.  The settlement attorney that is handling the transaction should have the form prepared to be signed at or before settlement.  An attorney must be used in Delaware for all real estate transactions whether it is a purchase or a refinance.
There is no mortgage tax in Delaware like other states such as New York.  A mortgage tax is a tax on the amount of the mortgage.  There is also no recordation tax in Delaware like in Maryland.  The only other government fees associated with the purchase or refinance of a home in Delaware are the recording fees that are charged to record the note and deed at the court house.
When buying a home the transfer taxes and the recording fees should be disclosed on a Good Faith Estimate.  The transfer taxes are based on the purchase price so they can be accurately be calculated on the Good Faith Estimate.  The government recording fee depends on the number of pages being recorded so can only be estimated initially and won’t be accurate until the Final HUD settlement statement is prepared.