Maryland Reverse Mortgage

What is a reverse mortgage?

A reverse mortgage is a special type of loan for homeowners over the age of 62. A reverse mortgage allows homeowners to stop making mortgage payments and start receiving money for the equity that homeowners have built up in their home (generally, this equity is built through mortgage payments). This means that the money can instead be used for other purposes, like supplementing income, paying for expenses, complete home improvements, or any other purpose. Read more about reverse mortgages →

Reverse Mortgage for Maryland Residents

Increasing home values in the state of Maryland make reverse mortgages particularly desirable for seniors residing in Maryland. The National Reverse Mortgage Lenders Association recently found that homeowners 62 and older have seen their home equity increase by 3.1% in first quarter of 2017. The increase in equity allows seniors to get more money out of their reverse mortgage than they would otherwise be able to.

Finding a Reverse Mortgage Lender in Maryland

Maryland is home to many different reverse mortgage lenders that are able to provide diverse solutions. Recognizing that homeowners and financial situations are different, lenders are able to create loan packages that may be able to help you and your situation. Get a no obligation information kit for Maryland residents →

Maryland Reverse Mortgage Counselors

Prior to taking a completed loan application, seniors must complete a free reverse mortgage counseling session with an approved counselor to ensure that they understand the benefits and drawbacks to a reverse mortgage. Below is a listing of counseling agencies:

Name Agency ID Address Phone Web Site
ASIAN -AMERICAN HOMEOWNERSHIP COUNSELING INC. 80375 12320 PARKLAWN DRIVE
ROCKVILLE,  MD  20852-1726
(301) 760-7636 http://www.aa-hc.org
CECIL COUNTY HOUSING AGENCY 84087 200 CHESAPEAKE BLVD STE 1800
ELKTON,  MD  21921-6682
(410) 996-8216 http://www.ccgov.org/dept_housing/index.cfm
DRUID HEIGHTS COMMUNITY DEVELOPMENT CORP. 80763 2140 MCCULLOH ST
BALTIMORE,  MD  21217-3529
(410) 523-1350 http://www.druidheights.com
FREDERICK COMMUNITY ACTION AGENCY 81056 100 S MARKET ST
FREDERICK,  MD  21701-5527
(301) 600-1506 www.cityoffrederick.com/fcaa
GUIDEWELL FINANCIAL SOLUTIONS, A.K.A CCCS OF MARYLAND AND DELAWARE, INC 84495 2ND FLOOR
757 FREDERICK RD
BALTIMORE,  MD  21228-4500
(443) 451-1689 http://www.guidewellfs.org
GUIDEWELL FINANCIAL SOLUTIONS, INC 90302 757 FREDERICK RD, 2ND FL
BALTIMORE,  MD  21228-4500
(410) 747-2050 n/a
HARFORD COUNTY HOUSING AGENCY 80331 15 S MAIN ST STE 106
BEL AIR,  MD  21014-8723
(410) 638-3045 http://www.harfordhousing.org
HOMEFREE – U S A 80816 3RD FLOOR
6200 BALTIMORE AVENUE
RIVERDALE,  MD  20737-1054
(301) 891-8400 https://HomeFreeUSA.org
HOUSING INITIATIVE PARTNERSHIP, INC. (HIP) 81843 SUITE 555
6525 BELCREST ROAD
HYATTSVILLE,  MD  20782-2003
(301) 699-3835 www.hiphomes.org
SOUTHEAST COMMUNITY DEVELOPMENT CORPORATION 81066 SUITE 200
3323 EASTERN AVE
BALTIMORE,  MD  21224-4109
(410) 342-3234 http://www.southeastcdc.org
WASHINGTON COUNTY COMMUNITY ACTION COUNCIL (WCCAC) 81797 117 SUMMIT AVE
HAGERSTOWN,  MD  21740-5508
(301) 797-4161 http://www.wccac.org

*This list is updated periodically. It is recommended to check with the HUD website for any other companies.

Process To Get a Reverse Mortgage

By now, you’ve done your homework. You’ve read the ultimate reverse mortgage guide, and you’ve determined that a reverse mortgage is a good idea for you and your family. Now, it’s time to get started with the reverse mortgage process itself.

For most people, the complete process can take between 30 and 45 days, but the reverse mortgage process can be done at your own speed. You can move things along faster, if you would like to, and you can move things along slower, if certain elements take longer. Generally, the more willing and dedicated that the reverse mortgage holder is to the process, the faster the process can go on.

Step 1: Reverse Mortgage Counseling

The first step is to undergo reverse mortgage counseling. This is a requirement by Housing and Urban Development (HUD), and you must be able to submit a signed Home Equity Conversion Mortgage Counseling Certificate. Counseling can be completed online, via phone, or in person. Many national and municipal groups are able to provide these counseling services at a low cost.

Step 2: Complete a Loan Application

The loan application allows the lender to begin the process of preparing your reverse mortgage from their end. With the help of your loan officer, you will be asked some basic questions about your home, tax and insurance status, and yourself. The loan application is not binding and it can be withdrawn or cancelled at any point along the way.

Step 3: Home Appraisal

Next, the lender will order a home appraisal to verify the market value of your home. The reverse mortgage appraisal will be completed by a Federal Housing Administration appraiser, and it must comply with the guidelines set out by the FHA.

Step 4: Underwriting

Underwriting primarily takes place on the lender’s end, and in this phase, the underwriter reviews all of the information and documentation that has been provided. The underwriter closely reviews everything to ensure that there are not any problems or conditions prior to the loan closing. If there are any conditions, they can be resolved, and a final closing can be set up.

Step 5: Loan Closing

The final step of the reverse mortgage process is the easiest. A notary or an attorney will meet with you to sign the closing documents. The reverse mortgage holder will have the opportunity to check over all facts and figures to ensure that everything is correct.

After the loan has been closed, the reverse mortgage holder has up to three business days where they can cancel the reverse mortgage without any penalty. This period is known as the “right of rescission”. Once the right of rescission period has passed, the title company will issue a check, wire the funds, or set up the line of credit for the reverse mortgage holder’s account. After this point, the reverse mortgage is active, and the reverse mortgage holder can start to use the proceeds from their mortgage–whether they want to do home improvements, supplement their savings, or use the proceeds however they want.

What is a reverse mortgage?

A reverse mortgage is a loan for homeowners over the age of 62, and it requires no monthly mortgage payments. A reverse mortgage has the key benefit of allowing homeowners to access the equity that they have earned in their home, and it eliminates monthly mortgage payments. This means that you may be able to use part of the equity in your house to increase your income, pay for expenses, complete home improvements, or use it however you wish.

An easy way to think about a reverse mortgage is to compare it to a conventional mortgage. In a conventional mortgage, a homeowner makes a monthly payment to their lender. In a conventional mortgage, each payment increases the equity in the home. In a reverse mortgage, each payment to you draws upon the equity in the home, providing access to cash that had been tied up in equity. Without ever selling your home, you can access the equity stored in the home.

Since a reverse mortgage is a loan, it must eventually be repaid. Most reverse mortgage loans become due when the homeowner sells the home or passes away, but borrowers always have the option to pay off the loan at any time that they wish. Reverse mortgages are designed so that the amount that is owed cannot be greater than the value of the home. For example, if a reverse mortgage balance is $250,000 and the home is valued at $200,000, the borrower will not owe the difference. This protects homeowners. On the other hand, if the mortgage balance is $250,000 and the home is valued at $300,000, the remaining $50,000 belongs to the borrower or the borrower’s estate.

The vast majority of reverse mortgages are HECM loans, which is a program offered by the Federal Housing Administration. These are federally-backed loans, which means that the federal government guarantees the loan.

There are two other types of reverse mortgages:

  • Single-purpose reverse mortgages (Offered by governments and nonprofits)
  • Proprietary reverse mortgages (Private loans backed by an issuing company)

Requirements for a Reverse Mortgage

Most reverse mortgages are HECM (home equity conversion mortgage) loans, so these requirements focus on HECM loans. To qualify for a HECM loan, you must be able to meet the following requirements:

  • Be at least 62 years or older
  • Own your home or have a small amount to pay remaining on your mortgage balance
  • Be up-to-date and stay up-to-date on taxes and homeowner’s insurance
  • Your home is in good condition
  • Complete a free consumer information session provided by the Department of Housing and Urban Development with an approved HECM counselor

Borrowers also need to go through a financial evaluation. The evalutation ensures that borrowers can pay for:

  • Property taxes
  • Homeowner’s insurance
  • Basic home maintenance
  • Home owner’s association fees (if required)

How much money can I borrow?

The amount of money that is available to borrow in a reverse mortgage depends upon a few factors.

  • Age. As you become older, you are able to borrow more money. For example, a 85 year old can borrow more than a 62 year old.
  • Value of home. If your home is more valuable, you can borrow more. For example, if you own a house with a market value of $300,000, then you will be able to borrow more than someone who owns a house worth $100,000. You can also borrow more if your home value has appreciated. For example, if you fully own a house you paid $300,000 for and the market value increases to $350,000, then you can borrow more.
  • Interest rates. At lower interest rates, you are able to borrow more. If the interest rate is 2%, you can borrow less than if the interest rate is 6%.

How You Can Receive Your Money

Reverse mortgages are extremely flexible in the way that the money can be received. Generally, there are four basic options to choose from:

  1. Receive a lump sum of cash at closing
  2. Receive a check each month for as long as you live in the house. This is called a “tenure annuity”.
  3. Receive a check each month for a set period of time. You can decide how long this is. This is called a “term annuity”.
  4. Receive a line of credit that can be used at your discretion. The amount of money available in the line of credit will grow over time.

A borrower for a reverse mortgage does not necessarily need to choose one of these options. You could choose any combination of options to best suit your financial needs. For example, you could take some cash up front and also keep a line of credit open.

Getting Started with a Reverse Mortgage

It is easy to get started with a reverse mortgage. Click here to get an information kit for free and with zero obligation.