Maryland Mortgage Rates

Living in Maryland

More than 6 million people call Maryland home. Famously known for its blue crabs, a local delicacy, as well as for providing easy access to Chesapeake Bay, the state is also home to more than 230,000 residents who work for the federal government. Some of Maryland’s biggest attractions are Baltimore’s Inner Harbor and Annapolis, the state capitol, which is home to the U.S. Naval Academy.

Home prices in Maryland vary widely, depending on location; prices tend to be highest in the suburbs around Washington, D.C. In March, homes had a median sale price of $285,000, up 3.6% from $275,000 the year before. Statewide, home sellers received an average of 96% of their asking price. Meanwhile, the inventory of homes for sale dropped from 19,316 in March 2018 to 18,875 in March 2019. These numbers indicate homebuying in Maryland is now a seller’s market.

Competition for homes may not let up soon. In 2018, Maryland ranked sixth in the country for net in-migration, behind states such as Texas and Florida, a trend driven in large part by people moving in from the expensive housing market in Washington, D.C. Last year, Maryland also saw a 1.9% uptick in job growth, slightly higher than the national average. Meanwhile, Baltimore ranked 9th out of the 25 largest metro areas nationwide for job growth in 2018, tying with cities such as Denver and Miami.

The rules and costs of buying a home in Maryland

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.

Taxes

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.

Programs for homebuyers in Maryland

The state of Maryland, through the Maryland Mortgage Program (MMP), offers homebuyer assistance programs that can help some buyers receive a low-interest mortgage, pay down payment and closing costs, and receive a federal tax credit for a portion of their mortgage interest. Some counties, such as Montgomery County, and cities, such as Baltimore, also provide assistance to qualified buyers. Check county and city websites to see what they offer, and read on for more about three of the statewide programs available through MMP.

MMP 1st Time Advantage

The 1st Time Advantage loan program offers several options for providing first-time homebuyers with an affordable, 30-year, low-interest-rate mortgage; two of the options also provide down payment help either in the form of a $5,000 loan or a second, zero-percent, deferred-payment loan equal to 3% of the home’s value.

The program has income limits based on the size of your household and your location. Applicants may also be required to complete an approved homebuyer education course.

Learn more

Maryland SmartBuy

The Maryland SmartBuy program helps homebuyers pay off their student debt while using a Maryland Mortgage Program loan to buy a home at the same time; the debt is wrapped into the mortgage. Buyers generally use the loan to purchase a move-in-ready home owned by the state of Maryland. However, for a limited time, Maryland is now offering a program that can be used to buy any home in the state that meets MMP guidelines.

To qualify for a SmartBuy loan, buyers must have a minimum of $1,000 in student loans. They may finance student loan debt of up to 15% of the home’s purchase price, for a maximum amount of $40,000. The student loan debt needs to be paid off at the time of the home’s closing.

Learn more

Partner Match

The Partner Match program offers down payment assistance (up to $2,500) in the form of a zero-percent, deferred-payment loan. The loan is available to buyers who are using either a MMP 1st Time Advantage or Flex 5000 mortgage to buy a home and are receiving down payment assistance from a partner organization. These may include employers, builders, community organizations and local governments.

Learn more

Rate shopping tips

To get the best possible mortgage rate in Maryland, follow these tips:

Gather your information.

Make sure you know the type of loan you want (such as conventional or FHA financing), the length of your loan (such as 15 or 30 years), a fixed or adjustable rate, the size of your down payment, the type of property you plan to buy and the approximate sales price. By using the same loan terms, you’ll be more likely to get an apples-to-apples comparison.

Contact three or more lenders on the same day.

Since mortgage rates change daily, you’ll want to get quotes all at once so you know how much they vary from one lender to another.

Confirm total lender fees to compare them.

Even if your lender quotes you a flat fee for a mortgage, ask for a break-out of all associated fees and costs, such as the loan application fee, recording fee and fees for attorneys. For a better comparison, ask for the loan’s annual percentage rate (APR), which will include fees and the interest rate. Also ask about the potential cost of points — generally 1% of a mortgage balance — that may allow you to receive a lower mortgage rate. Points can be worthwhile if you plan to stay in the home long enough to break even. Either way, make sure you know if the mortgage rate being quoted includes one or more points.

Ask about locking your rate.

If a lender quotes you a desirable rate, ask about possibly locking in the rate (and for how long) if interest rates go up before you close on your home. Your lender may also be willing to offer you a “float down,” which means your rate could decrease if mortgage rates drop during your lock period.

The information in this article is accurate as of the date of publishing.