When you buy a home, you enter into a new world with its own language. The language of real estate can be scary, but not if you do some research. One of the things you will notice is a number of fees and taxes you have probably never heard of before. One of these is the mortgage recording tax. Here’s what you need to know about this little-known tax.

Who Has to Pay a Mortgage Tax?
The mortgage recording tax is used to document the loan transaction. This is separate from mortgage interest and otherannual property taxes. It is paid when you take out a mortgage, but it is a state-imposed tax. Not everyone has to pay it. There are currently eight states that charge mortgage recording tax. If you buy a home in Alabama, Florida, Kansas, Minnesota, New York, Oklahoma, Tennessee, Virginia or Washington, D.C., you will have to pay this tax.

Rates vary by state but some charge as little as 12 cents per $100 of the mortgage principal (the amount you are borrowing from the lender). Check with your state to see what you will owe in mortgage tax before you purchase a home. In some instances, the tax may vary by county or city within a state as well.