How to Buy a House in Maine: A Homebuyer’s Guide
Updated: March 1, 2023
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The average median home in Maine is valued at around $370,227, seeing an increase of about 12.5% compared to last year’s prices. The national average of median home prices is around $357,589, making Maine one of the more expensive states to buy a home.
Staying up to date on the current real estate trends and the local economy can help you avoid falling into the trap of purchasing a home that is beyond what you can afford.
Buying a home can be an exciting yet stressful journey that requires a lot of paperwork. If you are considering purchasing a home, MoneyGeek is here to help.
Choose an Ideal Location
If you are in the market for a home in Maine, median home prices vary widely across cities. Homes in Milo are typically cheaper at around $78,275, compared to Sebec, which is three times the price at around $224,003.
Although the total price of the home is the first factor that you should consider, don’t forget to evaluate the cost of living, security, amenities and other factors that could affect the total cost could give you a general idea of expenses to expect.
Calculate Mortgage Rates
To calculate your mortgage rates, you first need to determine your initial loan amount and add the interest rates that you need to pay. By calculating your mortgage rates, you can evaluate whether a specific property is within your price range.
Applying for a mortgage involves lenders taking a look at your financial information. This typically includes reviewing your income, credit history and debt-to-income ratio for them to offer a mortgage option that matches your profile.
Prepare Down Payment Requirements
Mortgage loans require a down payment, which is typically 3.5% to 20% of the total home cost. Most conventional loans will require a 20% down payment. On the other hand, other mortgage types like a VA or a USDA home loan don’t require a down payment, making homeownership possible for low-income earners who qualify.
Get Pre-Approved for a Mortgage
A mortgage pre-approval requires you to submit your financial information, including proof of income, assets and employment, to determine your eligibility. This is an important document to obtain since it shows you are a legitimate buyer.
Pre-approval differs from prequalification as it provides a more definitive amount that you will be able to borrow for your mortgage. Prequalification is simply an indication that you are eligible to borrow money.
Conduct a Home Inspection
When buying a home, it’s worth hiring a home inspector who will identify the condition of the property you’re planning to purchase. This will give you an idea of whether you’re only getting minor yet manageable damages and repairs or if you are better off finding a different property elsewhere.
Some lenders may not even grant you a loan without conducting some home inspection.
Close Your Mortgage Loan
Closing your mortgage loan is as simple as signing the mortgage documents. However, you must take great caution during this step and carefully review all the details in your contract. Make sure that you’ve locked in an interest rate that is realistic to your budget and verify the amount you need at closing.
There might be fees involved during the closing process that you must budget for. To get help covering some of the closing costs, buyers in Maine can seek down payment assistance programs in Maine.
Maine Homebuying Details
Maine is a wonderful place to buy a home and settle down. If you’re considering buying a home in the Pine Tree State, consider consulting with an experienced realtor or a local real estate agent.
While the process of buying a home in Maine is similar to many other states in the country, don’t take shortcuts on the inspection process even though the state doesn’t have home inspection requirements. Having an inspection done can save you money in the long run.
Homebuyers in Maine can either choose a conventional home loan or seek assistance from government-backed loans that have more flexible requirements. Shoppers with limited income who can’t provide a sufficient down payment on a home can check out various down payment assistance programs in the state.
The Maine Homeowner Assistance Fund (Maine HAF) is a federal relief program funded by the U.S. Department of Treasury and administered by the Maine Bureau of Consumer Credit Protection. This program helps homeowners affected by COVID-19 who are behind on their mortgage, providing up to $25,000 of funds to eligible households.
Frequently Asked Questions About Buying a Home in Maine
To help you shop for homes in Maine, MoneyGeek answered the most frequently asked questions about buying a home in Maine.
When purchasing your Maine home, some of the questions you should ask:
- Where is the best location based on your needs and budget?
- What type of mortgage and mortgage rates can you qualify for?
- How much can you afford to put as a down payment?
Maine is among the U.S. states where median home prices are higher than the average. However, the market is always changing, so you’ll want to proceed with caution if you are considering buying a house in Maine. Evaluate your financial situation to determine if buying a home in Maine is a wise choice for you.
Median home prices in Maine have been increasing steadily. List prices and mortgage interest rates are currently higher than normal, which means it might not be the best time to buy a house. However, these are market trends for Maine and not within the cities. You may still check with your local real estate agent who knows more about local trends.
Income requirements vary by lender and are likely to be determined by the type of mortgage you can obtain. However, you are usually required to put down 20% or obtain private mortgage insurance (PMI) as an alternative.
Property tax rates in Maine vary by city.
Homes in Milo are typically less expensive compared to Sebec city, which costs roughly three times as much.
sources
- HAF Maine.gov. "Maine Homeowner Assistance Fund (HAF) Program." Accessed October 23, 2022.
- HUD.gov. "The U.S. Department of Housing and Urban Development." Accessed October 23, 2022.
- Living Cost.org. "Cost of Living in Bangor, ME." Accessed October 22, 2022.
- Living Cost.org. "Cost of Living in Maine." Accessed October 22, 2022.
- Living Cost.org. "Cost of Living in Portland, ME." Accessed October 22, 2022.
- Maine.gov. "Property Tax." Accessed October 23, 2022.
- Maine Housing.org. "MaineHousing Advantage Program." Accessed October 23, 2022.
- Maine Housing.org. "MaineHousing First Home Loan Program." Accessed October 23, 2022.
- Maine Legislature.gov. "An Act To Require Professional Licensure for Property Inspectors." Accessed October 23, 2022.
- Redfin. "Maine Housing Market." Accessed October 23, 2022.
- The Center Square. "Maine Red-Hot Housing Market Cooling Off." Accessed October 23, 2022.
- United States Department of Agriculture. "Property Eligibility Disclaimer." Accessed October 22, 2022.
- U.S. Department of Housing and Urban Development. "Homeownership Assistance: Maine." Accessed October 24, 2022.
- World Population Review. "Crime Rate By State." Accessed October 22, 2022.
- Zillow. "Maine Home Value." Accessed November 28, 2022.
- Zillow. "Milo Home Value." Accessed October 22, 2022.
- Zillow. "Mortgage Rates in Maine." Accessed November 28, 2022.
- Zillow. "Sebec Home Value." Accessed October 23, 2022.
- Zillow. "United States Home Value." Accessed November 28, 2022.