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8 min read Mar 21, 2024

How to Buy a House in Maine in 2024: 7 Proven Steps

Owning a home is an American dream. In 2023, around 4.5 million people achieved this dream by buying a home. However, buying a home in Maine can be complicated, so having a guide can be helpful.

Although interest rates in the Pine Tree State are steady at about 6.89%, home prices are rising by 5.7% YoY. This makes it difficult to afford a house in Maine. Without careful planning, the process can be prolonged and costly. Here are some tips to help you buy a house in Maine affordably in 2024:

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10 Steps to Buying a House in Maine

We have simplified the process of buying a house in Maine in 10 simple steps. Here’s how you can do it:

Step 1: Check Your Financial Health

You need to assess your financial health before making a home purchase in Maine. Here’s what you need to do:

  • Check Your Credit Score: The credit worthiness of you as a borrower is determined by your credit score. A good score can fetch you lower interest rates. You can get a free credit report from Equifax, Experian, or TransUnion.
  • Find Your DTI Score: Maine mortgage lenders use the DTI score to determine your eligible mortgage amount. Typically, a DTI of 36% or lower is ideal. To find your DTI ratio, divide your monthly debts by your gross monthly income.
  • Calculate How Much House You Can Afford: Before requesting for pre-approvals, you should estimate the costs of home ownership. And how much you can afford. Home affordability calculators consider your income, debts, expenses, and help you get an estimate of monthly mortgage payments.

Step 2: Plan Your Down Payment and Closing Costs

A 20% down payment is typically the norm, but you can choose your own amount. The average down payment on a house depends on the type of mortgage you opt for.

Maine buyer closing costs may come as a shock for first-time buyers. Like a down payment, closing costs are out-of-pocket expenses you pay to finance, buy, and own a house. Budget 2% to 5% of the total purchase price for closing costs. 

» How Much Down Payment for a House: Discover the ideal down payment amount to make an informed purchasing decision.

Most importantly, if you are looking to buy a house with cash, YOU CAN SKIP TO STEP 5.

Step 3: Find the Right Mortgage for You

When embarking on the journey of homeownership in Maine, you need to know the types of home loans and which one’s the best for you:

  • Conventional Mortgages: A conventional mortgage is a loan not backed by a government agency. You can get a conventional loan from private mortgage lenders.
  • FHA Loans: The Federal Housing Administration grants FHA loans to borrowers having lower credit scores and higher DTI ratios. Remember, low credit scores = higher interest rates.
  • VA Loans: The US Department of Veterans Affairs offers VA loans to veterans. With no down payment and lenient credit requirements, you can even get a VA loan with bad credit.
  • USDA Loans: Low to moderate-income home buyers in rural areas can apply for USDA loans. They offer zero down payment loans, but you need to cover the USDA closing costs of 2% to 6%.
    Your lender may require you to purchase private mortgage insurance if you put down less money upfront. This is asked for loans with less than 20% downpayment.

Step 4: Get Mortgage Preapproval Letter

A mortgage pre-approval helps you to:

  • Understand Your Budget: A preapproval letter gives you a clear idea of how much you can afford to spend on a home in Maine. It takes into account your income, assets, debts, and credit score.
  • Stand Out to Sellers: Buyers holding preapproval letters are often given preference by sellers. It shows that you’re serious and financially prepared to make the purchase.
  • Accelerate the Process: With a preapproval letter in hand, you can expedite the mortgage application process when you find the perfect home. This can help you move quickly in this competitive housing market.

» Documents Needed For Mortgage Pre Approval: Gather the necessary documents to streamline your application process.

FSBO listing sites like Houzeo, Redfin, and Zillow allow you to make offers online. You can also schedule in-person showings online using Houzeo Showings

Here are a few things you should keep in mind while shopping for homes in Maine:

  • See Homes In-person: To truly understand a home and its neighborhood, visit it in person after checking it online.
  • Keep Your Schedule Open: Ensure you have free time to see the newly listed properties.
  • Attend Open Houses: Explore the neighborhood of your interest. Attend open houses of listings that catch your interest.
    💡 Pro Tip: Search Properties Without a Realtor in Maine!

    On Houzeo, you can start your home search without a Realtor in Maine. You can sort homes by its location, mark favorites, and request showings online, in just a few clicks!

    How to Buy a House Without a Realtor: Read our blog to know more.

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Step 6: Make an Offer

Work on making your offer appealing after finding a home you want to buy in ME. Your offer should include the offer price, preapproval letter, and proof of funds for the down payment. Additionally, include contingencies or terms of purchase. 

You can waive some contingencies or offer cash to make your offer attractive to home sellers. Home buying process contingencies usually include a home appraisal, property inspection, etc. 

After the seller accepts your offer, both parties will sign the purchase agreement and open an escrow account. You need to keep an escrow deposit of 1% to 2% of the purchase amount in the escrow account.

    In most cases, home sellers in Maine make counteroffers. You can negotiate, accept or reject the counter-offer.

Step 7: Get Homeowners Insurance

Homeowners insurance is voluntary but essential to safeguard your home. It provides financial protection against risks like damage to your residence and belongings due to unforeseen events. It also covers hazard insurance.

Homeowners insurance also offers liability coverage in case someone is injured on your property and you’re found legally responsible.

Step 8: Schedule a Home Inspection & Appraisal

A home inspection in Maine helps you understand if the property has any structural or mechanical issues. Based on the home inspection report, you can demand repairs from the home seller or back out of the deal.

Your mortgage lender will hire a Maine home appraiser to determine your house’s current market value. The loan amount will match the appraised value. If there’s a shortfall, consider increasing the down payment or renegotiating the offer.

Step 9: Ask for Repairs or Credits

You should also ask the seller for repairs or credits before you buy a cheap house in Maine. Ensuring the property’s condition is crucial to prevent unexpected financial burdens after paying closing costs.

It also provides you with leverage during negotiations to secure a fair deal that reflects the property’s true condition.

Step 10: Close the Sale

Congratulations! 🎉

You did it. It’s time to close the deal.

It is the last step in which you pay the closing costs, sign the paperwork, and get the home keys. 

Around three days before closing, your lender will give you the closing disclosure. It contains all the mortgage details, such as mortgage type, monthly payment, loan term, interest rate, origination fees, the money you need at the closing, etc.

During the final settlement, the escrow will transfer your wired closing costs and down payment to the seller after deducting necessary expenses.

Insider Advice for Prospective Maine Homebuyers

Home purchasing in Maine is an overwhelming yet exciting journey. To help you be prepared, here are some tips for buying a home:

  • Prioritize Early Saving: Calculate both one-time and recurring costs, such as the down payment, closing costs, move-in expenses, and property taxes. This will help you save accordingly for your dream house.
  • Maintain a Healthy Credit Score: Your credit score affects your eligibility for home loans and the interest rates offered. Pay bills on time, keep credit cards open, and monitor your payments regularly to repair your credit score.
  • Opt for First-Time Homebuyer Programs: Explore first-time homebuyer programs offered by states and cities. These programs may include low-interest

Find Your New Home With Houzeo

With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of homes for sale in Maine on Houzeo.

Find Your Dream Home 🏡

text 1st item

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Find Your Dream Home 🏡

text View 0 Homes For Sale in Maine

text1st item

text2nd item

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Find Your Dream Home 🏡

View + Inspectors in Maine

Find Your Dream Home 🏡

View 0 Homes For Sale in Maine

Where do you want to live?

» NEED MORE CLARITY? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.

Bottom Line

In conclusion, with declining home prices and stabilizing mortgage rates, now is the best time to buy a house in Maine. Plan your down payment and closing costs in advance to avoid falling short of cash. Likewise, make timely payments to ensure that your credit score stays high. 

By following the actionable tips provided in this article and with careful planning, you can confidently embark on your journey to homeownership.

FAQs on How to Buy a House in Maine

What to know before buying a house in Maine?

Before buying a house in Maine, you must understand Maine's housing market conditions, to know whether it is a good time to buy a house now.

How to plan to buy a house in Maine?

To start planning to buy a house in Maine, you need to check your financial health first, followed by planning your down payment and closing costs.

How easy is it to buy a house in Maine?

It is easy to buy a house in Maine, provided you have planned your finances, have a good credit score, and have a mortgage preapproval letter.

Where to start when buying a home in Maine?

When buying a home in Maine, you can start by finding out how much house you can afford.

Can I use an FHA loan to buy a foreclosed home?

Yes, you can buy a foreclosed home with an FHA loan as this loan is flexible and can be used for various types of property units, including foreclosed homes.

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