A 10-Step Guide To Buying A House In Maine

Prized for its coastal communities, succulent seafood and gorgeous natural landscapes, it’s no wonder that the idea of buying a house in Maine is appealing. Before you call Maine home, though, it’s important to weigh the pros and cons and understand how the homebuying process works.

Read on for a step-by-step guide to buying a beautiful home in Maine.

The Pros And Cons Of Living In Maine

Maine is highly ranked for its safety, schools, and quality of life; still, living in any place comes with potential disadvantages. Consider some pros and cons of living in Maine.

How To Buy A House In Maine

Buying a house in Maine requires thorough research, an in-depth understanding of the state’s unique real estate market and housing programs, and working with a real estate professional to secure the best offer.

The homebuying process can be complex, regardless of the state. So, we’ve simplified the process into 10 steps to help you buy a house in Maine.

1. Understand The Cost Of Living In Maine

Getting a solid idea of the cost of living in Maine can help you decide if it’s the right state for you. If it is, you can then choose a location based on your budget, ensuring you’ll be able to live your desired lifestyle.

Cost of living refers to the amount of money you’ll need to live comfortably in a particular area. This figure factors in the cost of essential living expenses such as food, housing, utilities, health care, transportation and other miscellaneous items and services.

While the exact cost of living will vary widely based on your specific location, the figures below give insight into how much it costs to live in Maine.

• Median home sold price: $320,496
• Median mortgage payment: $2,142
• Median monthly rent: $2,000
• Median household income: $69,543
• Average property taxes: $2,756

2. Research The Maine Real Estate Market

Once you have an idea of how much you can afford, a good next step is to research the real estate market in Maine. Thorough research can help you understand current market conditions and explore houses for sale in Maine. You’ll then be better equipped to make informed decisions about where you want to live and the financial implications.

Your real estate agent can help you with this step, as real estate professionals have a wealth of knowledge and resources. 

3. Learn The Requirements To Buy A House In Maine

If you plan on taking out a loan to buy your home, prospective lenders will want you to meet certain requirements. Requirements will vary based on the home loan type. For conventional loans, you’ll typically need a credit score of at least 620 and a DTI of 50% or lower to qualify. Also, you can expect to pay anywhere from 2% – 6% of the loan’s amount for down payment and closing costs.

Government-backed loans such as FHA, VA and USDA loans tend to have more lenient requirements. To qualify for an FHA or VA loan, you’ll generally need a minimum credit score of 580. Your credit score will play a role in determining your minimum down payment. With a 580, you’re looking at a minimum 3.5% down payment. Some lenders may also accept a lower credit score if you can make a larger down payment.

4. Look Into Mortgage Programs For Maine Home Buyers

The Maine State Housing Authority – also known as MaineHousing –  offers a few different programs to make buying a home in Maine easier and more affordable for first-time home buyers. You must, however, meet specific requirements to reap the program benefits.

When buying a home in Maine, find out if you qualify for the following programs: 

First Home Loan

The First Home Loan program offers low fixed interest rate mortgages along with down payment and closing assistance for eligible first-time home buyers. First Home Loan also simplifies the complex home buying process with a simple 6-step framework, including a required home buyer education course that equips buyers with the necessary tools for success.

To qualify for the First Home Loan program, you must:

• Be a first-time home buyer or have not owned a home in the past 3 years
• Meet the household income requirement
• Have good credit history
• Have a minimum credit score of 640
• Have a monthly mortgage payment that stays below 30% – 33% of your income

Maine HoMEworks

Main HoMeworks is a nonprofit organization that is passionate about home buyer education, believing it’s a crucial first step to homeownership. HoMEworks offers in-person and online home buying classes – a requirement if you’re applying for a MaineHousing mortgage.

First Generation Program

The First Generation Pilot Program, or First Gen, is specially designed for buyers who have never lived in a home owned by their biological parents or legal guardians, as well as those who were in foster care during their childhood. The program offers a low fixed interest rate mortgage, educational classes and assistance with down payment and closing costs.

To qualify, you must:

●      Be a first-time home buyer

●      Have either never lived in a home owned by your biological parents or legal guardian or have been in foster care at some point during your childhood

●      Have a minimum credit score of 640

●      Meet household income requirements

●      Have a monthly mortgage payment that stays below 30% – 33% of your income

Salute ME and Salute Home Again

For veterans, active-duty military members and retired military personnel who are participants in the First Home Loan program, Salute ME offers a 0.5% discount on the loan’s interest rate.

5. Choose A Place To Live In Maine

Maine is a vast state with no shortage of beauty and diversity. That said, picking a place to call home can feel overwhelming. Thinking about your needs and how a specific place fits your desired lifestyle can help you narrow down your choices. When choosing where to live, consider factors such as affordability, cost of living, transportation, climate, employment, health care and crime. You’ll also want to consider that where you choose to live may impact your social life and overall well-being.

You could also talk to locals to gather more information about the areas you’re considering. However, nothing beats visiting the area yourself to get a feel for your prospective home. Wherever you choose to live in Maine, make sure it checks off your nonnegotiables.

6. Select A Mortgage Lender

While you may be overwhelmed with the endless selection of mortgage lenders to choose from, it’s crucial that you shop around for the right one. You can research reputable lenders online or ask family and friends for references. The lender you choose will directly impact your interest rates, loan terms and overall home buying experience.

First, it’s important to understand your mortgage options. Have a clear idea of what type of loan you want and how much you can realistically afford. Next, compare rates and terms from several lenders, including down payment requirements, insurance, closing costs and other fees. Also, ask prospective lenders any questions you have about the mortgage application process. After carefully weighing your options, select the right mortgage lender for your unique situation.

7. Get Approved For A Loan

After you select a lender and submit your mortgage application, the next step is to get preapproved for a loan. While it’s not a guaranteed loan approval, a preapproval strengthens your offer, helps you shop within your budget and can even shorten your closing time.

Not sure how to get a mortgage preapproval? You can usually do so in person or online, depending on your lender. Present all required documents such as W-2 statements, tax returns, pay stubs and bank statements. Your lender will then evaluate your financial situation to determine loans you may be eligible for, how much you’re able to borrow and interest rates. Expect your lender to look at your income, credit score, assets and DTI to make a decision. You should typically hear back from your lender within 7 – 10 business days. Once approved, your preapproval letter should be good for 60 – 90 days.

8. Make A Winning Offer

Now that you’ve found the Maine home of your dreams, what’s next? It’s time to make an offer. Your real estate agent will prove especially invaluable during this part of the home buying process. They can help you decide on an offer, earnest amount and any contingencies you may want. Make sure you keep in mind how much you’ve been preapproved to borrow.

Once that’s done, you can draft an initial offer letter that includes all the important information regarding your offer. Should you find yourself in a bidding war, you may also need to come up with winning strategies, such as changing your offer and waiving contingencies.

9. Undergo The Appraisal And Inspection

Once your offer is accepted and you sign the sales contract for your new home, the home will need to be appraised and inspected. Most lenders require an appraisal and inspection to ensure the home is in an acceptable condition and its value matches the sale price.

Since the lender cannot loan more than the appraised value of the home, an appraisal is quite important. If the appraisal comes in lower than what you’re borrowing, you only have a few options: pay the difference out of pocket, negotiate a lower sale price or find a different home.

10. Close On Your Loan

The closing process typically takes between 30 – 45 days, but the timeline will vary depending on your unique situation. You might encounter some delays due to contingencies, finances, appraisal and the speed of your lender and real estate agent.

Before the home is officially yours, you’ll need to fill out some paperwork and present funds to the seller. A few days before closing, you should receive a disclosure detailing all your costs. On closing day, come prepared with identification, any necessary documentation and down payment and closing costs. Once you sign all the paperwork and handle the payment, you’re all set to move into your new home.

Additional Tips For Buying A Home In Maine

In addition to the 10 steps we’ve discussed, let’s consider some more helpful tips for buying a home in Maine.

• Find an agent experienced in Maine real estate. Working with a real estate professional who is well versed on the Maine housing market can be a game-changer in your home buying experience. An experienced agent can help you find the best home for your financial and personal needs.
• Take time to build your credit. Your credit score is extremely important when buying a home. In general, buyers with higher credit scores lock down the best interest rates and loan terms.
• Be strategic with timing. The best time to buy a house in Maine is usually in the winter. Sales tend to slow down in January, resulting in lower listing prices and higher inventory. The right timing can make all the difference in getting the best deal on a home.
• Visit the area before choosing a neighborhood. From big, bustling cities to cozy towns, Maine has many neighborhoods to choose from. It’s often best to visit several neighborhoods before buying to find the right one for your desired lifestyle.

The Bottom Line: Careful Planning Pays Off When Buying Property In Maine

While every state comes with a unique set of considerations, buying a home in Maine generally follows the standard home buying process. Before settling down in this cozy, coastal state, do your research and work with an experienced real estate agent to find the best home for you.

Having trouble finding a real estate agent that’s the right fit? We’ve got you covered. Work with a Verified Partner Agent from Rocket Homes^SM for the best possible home buying experience.