Like most states, Maryland has regulations in place to help homeowners.
Home seller and buyer laws
- Property condition disclosure: Maryland’s real estate regulations offer sellers a choice of completing either a disclosure or a disclaimer about the condition of their property. Sellers who complete the disclaimer form are not required to provide any general information about the home’s condition, but they must still provide any knowledge they have about defects that might harm the safety or health of anyone who buys or lives in the house. The disclosure form asks for detailed information about the home’s structural integrity, appliances, possible pest problems, and electrical, plumbing and air-conditioning systems.
- Attorney state: By law, Maryland homebuyers are required to have an attorney who represents their interests when closing on a sale.
- Foreclosures: Maryland law allows for both judicial and non-judicial foreclosures, although the latter comes with restrictions.
With a judicial foreclosure, lenders rely on courts to handle the sale of the home, and homeowners often benefit from the many notifications (and sometimes mediation) they are entitled to receive. In non-judicial foreclosures, lenders and borrowers generally resolve differences without court oversight.
During a non-judicial foreclosure in Maryland, a court is only required to ratify the home’s final sale. Homeowners should know that if the sale of a foreclosed home in Maryland doesn’t entirely pay off the mortgage, a lender can file a deficiency claim to force them to repay the remaining balance.
- Equitable distribution state: Some states are community property states, which means that in the event of a divorce, all assets — including real estate property — must be divided 50/50. Maryland, however, is an equitable distribution state, which means assets are divided fairly, according to factors such as the contribution each member of the divorcing couple made to those assets. In Maryland, property purchased or received by one spouse before the marriage stays with that spouse after the divorce, unless there is a title document that lists both spouses as owners.
In Maryland, the state imposes both a recordation tax and a transfer tax when homes are sold, and some counties also require an additional transfer tax. In many cases, the taxes are split evenly between the buyers and sellers.
The state recordation tax is 0.69% on the first $500,000 of a home’s purchase price, plus an additional 0.1% on the amount of purchase price exceeding $500,000. The state transfer tax is 0.5% of the sales price, but if the buyer is a first-time homebuyer, that rate is reduced to 0.25% and is entirely payable by the seller. County transfer taxes range from zero to 1.5% of the sales price. Your mortgage lender is responsible for providing the exact amount you might owe for these taxes as part of the loan estimate you’ll receive once you’ve identified a home for purchase.
Maryland has one of the highest average property tax rates in the country. Property taxes are calculated based on a rate set by each county and the property’s assessed value. According to Tax-Rates.org, the average annual property tax across the state is now 0.87% of a home’s assessed value. That means the median property tax is currently about $2,770, based on a median home value of $318,600.
Some Maryland residents, depending on their income, are eligible to receive a credit on a portion of the property tax they pay. You can find more information about the state’s property tax credit program here. The state also offers potential property tax exemptions for veterans who are permanently disabled, surviving spouses of disabled veterans or those killed in the line of duty, and homeowners who are legally blind.
Conforming loan limits
Conforming loan limits in Maryland vary by county, according to the local cost of housing, and range from $484,350 to $726,525 for a one-unit home. The limits refer to the maximum amount a homebuyer can borrow without switching to a nonconforming loan, also known as a jumbo loan. Half of counties in Maryland currently have the lower conforming loan limit, while five counties that surround Washington, D.C., have the upper limit.
Conforming loans are important because they meet guidelines and limits established by the federal government for Fannie Mae and Freddie Mac, two government-sponsored enterprises that work to make the mortgage market more stable and affordable. Conforming loans generally offer the best interest rates for buyers with good credit; jumbo loans are generally considered to be riskier and tend to come with higher interest rates.