Securing a Maryland Reverse Mortgage

A Maryland reverse mortgage can help you get the retirement income you need to live the best years of your life comfortably and securely in the state of Maryland.  If you own a home and you’re at least 62 years old, you’re qualified to apply for this type of loan.  You don’t need to be wealthy.  All you need is home equity.

What is a reverse mortgage?

Your lender will take over ownership of your home equity and transfer it to you as cash.  This can either be done in a lump sum or through monthly payments over time.  This money can be spent in a variety of ways.  It’s your money.  You can use it as you wish.  Most seniors need it in order to pay living expenses, medical bills, and debt obligations, but you should feel free to apply your funds to anything you want.  Take a vacation.  Purchase a new home.  The choices are entirely up to you.

How can reverse mortgage funds be used?

Reverse mortgages in Maryland have allowed many seniors to gain the security they need to fund their retirements.  There are other options available to you, though.  If you want to put your money into other investments or make a down payment on a new home, a reverse mortgage can help you with this as well. 

What types of reverse mortgages exist?

Reverse mortgages have three forms:

• Goverment-insured: FHA HECM (Home Equity Conversion Mortgage).
• Single-purpose: backed by nonprofits or state or local government agencies. 
• Proprietary: backed by private entities.

The most common source is the FHA HECM reverse mortgage, which is insured by the Department of Housing and Urban Development (HUD). This article will focus on HECM reverse mortgages.

Who can get a reverse mortgage?

Homeowners aged 62 and older who own their home outright and have most of their mortgage paid off. If the current mortgage is not paid off, the initial reverse funds or some combination with out-of-pocket cash must be used to deplete the remaining balance. Credit score is not a qualifying factor. 

What costs are associated with a reverse mortgage?

There are several costs associated with securing an HECM reverse mortgage in Maryland, including but not limited to:

• Upfront fees: include the lender's fees, and can be paid from the reverse mortgage funds. This means, however, that the money taken cannot be borrowed back. So a $200,000 reverse mortgage with $16,000 in fees paid via the reverse mortgage funds will leave the homeowner with $184,000. 
• Closing fees: include all the same fees required of a traditional mortgage closing. 
• Reverse mortgage counseling fees: HUD mandates all reverse mortgage homeowners attend reverse mortgage counseling. Fees are in the $100 range but can be waived for lower income seniors. 
• Mortgage insurance: an upfront mortgage insurance premium (MIP) must be paid for reverse mortgage borrowers. It can be as low as 0.5% and as high as 2.5% of the appraised home value, unless the home is over $625,500, in which case the upfront mortgage insurance is calculated by the lender. 

How will I receive my funds, and for how long?

You can have your money dispersed to you in a number of ways.

• As a lump sum.
• As monthly payments.
• As a credit line tied to your equity.

Any variation or combination of two or more of the above options is available, too.

Your lender won’t own your home during any point in the process, even after the equity has been entirely depleted.  Your home will always remain your own. Your lender cannot repossess it.  

Does the equity need to be repaid?

You don’t have to pay your lender back for the funds until you move out of the home or pass away. Upon your passing, whoever inherits ownership of your home will be responsible for paying off your reverse mortgage debt.  But this can be accomplished easily.  Your heir or heirs can simply sell the home and provide the proceeds to the lender.  If your home declines in value after you take out the reverse mortgage, you don’t need to worry.  The lender cannot collect more money from your heirs beyond what the home sells for.

Maryland Reverse Mortgage Lenders

You’ll need to make sure you find the best lender before you take out a reverse mortgage.  You’ll have to pay for fees and interest on your loan, and each lender you contact will offer you a different rate.  Choose the one that is most affordable.

You can get more information about the process of finding a lender and applying by studying our reverse mortgage checklist.

Maryland Senior Resources

Maryland's Department of Aging lists a number of programs available for seniors that allow for independent living at home, including meal assistance, legal aid, nutrition and wellness, and health insurance. Some services have income caps, but there are no location restrictions so popular cities like Rockville, Annapolis and Baltimore are eligible. 

Lenders in: Maryland.