Recently, during a consultation, there was a case where a person had been retired for several years but was struggling to make ends meet on just their Social Security benefits. They had lived in their home in Frederick for over 20 years and did not want to sell it, but they needed to find a way to address their lack of fixed income.

In such cases, reverse mortgages are often considered. This is a product that allows homeowners aged 62 and older to receive funds by using their home equity as collateral. Unlike a traditional mortgage where payments are made monthly, in a reverse mortgage, the lending institution provides funds, which can be received as a lump sum, monthly payments, or a line of credit. A common type is the Home Equity Conversion Mortgage (HECM) insured by the Federal Housing Administration (FHA).

Looking at the housing prices in Frederick, the average home value based on Zillow was $469,711 as of June 30, 2026, which is a 1.1% decrease over the past year. According to Redfin, the median sale price over the last three months was around $442,000. For long-term residents, the equity built up in their home could serve as a source of additional monthly income.

However, the amount received monthly from a reverse mortgage is often not large enough to fully replace Social Security benefits. It is practical to obtain a specific estimate from a lending institution before applying, as the amount calculated based on home value and age may not cover the actual shortfall in living expenses.

Moreover, the funds received monthly do not completely replace living expenses. Property taxes, homeowners insurance, and maintenance costs must still be covered by the homeowner after obtaining a reverse mortgage. The average effective property tax rate in Maryland is around 1.00% (based on a median home value of $397,700, resulting in an annual property tax of $3,989, according to propertytaxrates.org). If these costs cannot be managed, it could lead to a risk of default, so a financial assessment is conducted during the application process.

The cost structure should also be considered. When combining origination fees, mortgage insurance, and closing costs, the initial costs are generally higher than those of a traditional mortgage. However, it is a non-recourse structure, meaning that if the home value falls below the loan balance later, heirs are not obligated to pay the excess. As equity decreases over time, the assets passed on to children may also diminish, which is something to discuss with family in advance.

In Maryland, the population aged 65 and older makes up about 16% of the total, and it has increased by 3.35% between 2023 and 2024 (Maryland Matters, reported July 2025). In Frederick County, there is a growing number of households wanting to continue living there after retirement, leading to frequent consultations regarding income shortages.

There are other options for addressing income shortages, such as part-time work, restructuring expenses, or sharing living costs with children. A reverse mortgage is just one of these options, and it is important to keep in mind that it differs from other methods in that it utilizes home equity.

• Initial costs (origination fees, mortgage insurance, etc.) are higher than those of a traditional mortgage
• Property taxes and insurance premiums must still be paid by the homeowner, and failure to do so can lead to default risk
• As equity decreases, the assets passed on to children may also decrease
• A mandatory counseling session with a HUD-approved counseling agency must be completed before applying

Income shortages are not problems that arise overnight; they often develop gradually over several years after retirement. Therefore, using a reverse mortgage should be approached as a way to plan for future living expenses rather than just a quick fix. Whether to receive monthly payments or keep a line of credit available can depend on this calculation.

HECM applications require a mandatory counseling session with a HUD-approved counseling agency before proceeding. If the goal is to cover living expenses, it is also advisable to check for other available support programs in addition to Social Security benefits. It is safer to take time to make a decision and discuss it thoroughly with family before proceeding.