Your Guide to Buying a Home in Maine

Maine Homebuying Guide: An Brief Introduction

• In Maine, a real estate attorney or title-company representative is used to complete the transaction. 
• The buyer and seller will complete the transaction together at the same table. 
• There are climate and environment issues unique to Maine. These issues will need to be addressed during the purchase process. For example, an older home in Maine may have a buried oil tank that needs to be decommissioned.

Phase 1: Negotiations for Purchasing a Home in Maine

Once you come to an agreement on price, you’ll have to negotiate specific details. These details will often include repairs, adjustments, and updates that are discovered during the inspection process. 

1. The first step is to have an offer accepted by both parties, which will launch the contract and negotiations segment.
2. When a price is reached, the buyer will pay the “earnest deposit,” which is essentially a payment that shows their true intention to make the purchase. In some Maine purchases, a small deposit is made first, then a larger deposit is delivered a few days afterwards. 
3. The seller will provide disclosures on the property. These are simply statements or information that the buyer should know before purchasing, and they can included necessary repairs, previous renovations, and past upgrades. A disclosure form is usually provided by the seller. This helps create a strong, trusting relationship between the buyer and seller. 
4. If the buyer chooses, they can perform inspections on the Maine property. Sometimes called “investigations,” this process helps uncover and important defects or issues with the home and must be completed within a certain period. In Maine, common inspections include a general home inspection, mold inspections, termite inspections, and more. If the home is older an inspection for lead paint or asbestos could be required. 
5. An oil-tank inspection may be needed. In Maine, as well as other east-coast states, homes were often heated with heating oil. This heating oil, which has largely been replaced by natural gas, was stored in buried tanks. These tanks, however, create significant environmental and health hazards, so having them “decommissioned” is often part of a property purchase. This can be a costly step, especially if the tank is underneath a structure such as the home or garage. Decommissioning may not be required, but the tanks create a hazard and many Maine homebuyers will want this handled before their purchase. 
6. A well test may also be needed. If the property has a well, the water will need to be tested for quality and safety. When using a mortgage, a well test is probably required. 
7. Once all testing and inspections are complete, the buyer has a certain period to request repairs, upgrades, renovations, or adjustments to the contract. They can, if inspection results were severe, walk away from the contract. Most of the time, they will request repairs and upgrades, wait for a response from the seller, and continue to negotiate until an agreement is reached. 

Phase 2: Getting a Mortgage for Your Maine Property

Most buyers can’t afford to purchase a home outright. Instead, they will need to use a home loan, typically called a mortgage, to make the purchase. Because hundreds of thousands of dollars are involved, the mortgage will need to go through a long process for approval. While simple and straightforward, this process can be time consuming. It’s best to start as early as possible. 

1. First, the buyer will submit a loan application. This can be done through a mortgage broker, an agent, or independently. 
2. The mortgage lender will send a “Good Faith Estimate,” which usually arrives within three days. This document outlines the estimated costs for making the loan, and while it may differ from the final costs, it’s usually accurate within a couple hundred dollars.
3. The lender will now request a variety of information and documents, including: 

• Recent Pay Stubs: For obvious reasons, the lender wants to know how much you make in a given month. Therefore, they will ask for pay stubs, which often form the foundation of a mortgage application. 
• Tax Returns: To gain a clear picture on your longterm financial situation, the lender will request tax information. This can indicate how much you have earned in the past, as well as a strong indication of what you will earn in the future. 
• Bank Statements: Lenders want to know how much you have in savings, which can influence your ability to repay the loan. 
• Debt Information: If you have high amounts of debt, it can increase your chances of loan default. Lenders want information on all your current monthly debt payments, as well as debt totals. 
• Miscellaneous Financial Information: From divorce to child support to legal settlements, anything that impacts your finances should be disclosed to the lender. This includes regular costs, such as alimony payments, as well as positive gains, such as receiving a legal settlement. Anything that impacts how much money you have on hand should be disclosed. 
• Explanation of Credit Inquiries: Frequent and rapid credit inquiries can impact your finances, so lenders will want an explanation if you have recently pulled your credit. (Beyond their credit request, of course.) 
• Information on any large deposits or cash gifts. Large gifts, such as ones that are used for downpayments, can create issues for lenders. They will need information on the deposit, including information for whether or not it is a loan that will need to be repaid. If it is an outright gift, the lender will likely request a “gift letter,” a written document signed by the gift giver that describes the nature of the gift, including the amount, their relationship to the buyer, and whether the cash is a gift or a loan. 
• Repeat Documentation: For a variety of reasons, lenders may request supporting documents or updated information on any of the above disclosures. Lenders want as much information as possible, so don’t get upset if they ask for fresh documents on your income, debt load, or financial picture in general. 

4. Once the lender has all the appropriate information, they will review the documents and issue an approval decision. Approval usually comes with conditions, including an appraisal. 

5. The appraisal will be required by the lender. If an appraisal comes in low, the lender may pull their approval decision or request changes to the loan terms. Many contracts have an appraisal clause that allows the buyer to back out from the deal if the appraisal is low. 

6. Assuming the loan is approved, the financing contingency can now be removed from the contract.  

7. If the buyer is unable to secure financing, they will need to provide evidence of rejection to the seller within a certain period. If this information is not provided, the deal can be cut off and the seller gets to keep the deposited cash. 

1. If everything goes as planned, homeowners’ insurance will be purchased and proof of this insurance will be provided to the lender. 

Phase 2: Getting a Mortgage for Your Maine Property

In the state of Maine, the closing process takes place at one table with buyers signing all documents at one time. After the documents are signed, the buyer can take possession of their new home!

1. Before signing, a title search will first be completed. This simply ensures that the title is clean and the buyer can make the purchase. This should be done early so you have time to deal with any title disputes. 
2. Assuming the title is clean, an attorney or title company professional will prepare the required paperwork. 
3. A final closing date will be schedule.
4. A cash figure for finalizing the deal will be given to the buyer. This tells the buyer how much they need to complete the transaction, and may include downpayment, fees, closing costs, and more. 
5. A final walkthrough is completed to verify the condition and quality of the home. 
6. The final closing can now occur. At the closing, all documents will be signed and finalized. 
7. The buyer will pay their remaining costs for downpayment and other fees. 
8. The transaction will be recorded with the appropriate city or county. 
9. You, the buyer, will now receive your keys, allowing you to move into your new home!

Loan Limits in the State of Maine

Limits for conforming loans are set by the Federal Finance Housing Agency, which determines the limits for each county in the nation. In high-cost areas, the limit can be higher, but most regions of the country fall under the base limit, which is currently $548,250 for a single-family home.

In the state of Maine, all counties fall under the base limit. From Aroostook County in the far north of the state, to York County, which borders New Hampshire and the Atlantic Ocean, the limit for a single-family property is $548,250. 

It’s possible to purchase a multiunit property with a conforming loan in the state of Maine. The limit for a two-unit property is $702,000, while the limit for a three-unit is $848,500. For a four-unit property, you can make the purchase for $1,054,500.

Maine Downpayment Assistance Programs

Some buyers in the beautiful state of Maine struggle to generate a downpayment. Fortunately, numerous programs help buyers throughout the state. 

Statewide DPA Programs for Maine Homebuyers

If you are a resident of Maine and have struggled to save for a downpayment, you may find help through the Maine State Housing Authority (MSHA). This government organization can provide downpayment assistance, and even has options for someone buying a multi-unit property. 

Advantage Program
The Advantage program from the MSHA can provide as much as $5,000 in downpayment support. The funds can also be used for closing costs and escrow expenses. This support can be structured as a grant, which means repayment may not be required if you use this option. 

Multi-Unit Advantage Program
There are many advantages to purchasing a multi-unit property as your primary residence. You get a home for yourself, as well as a property that can generate income and help pay off the mortgage. Eligible buyers can receive as much as $14,000 in assistance for a four-unit property. This is one of the rare downpayment assistance options that helps purchase a multi-unit home. 

Major Local DPA Programs in Maine

Auburn Homebuyer Downpayment Assistance
Homebuyers in Auburn, Maine can utilize downpayment assistance through the city government. With this program, buyers can get a low-interest loan (less than 1% according to their information) worth as much as 20% of the purchase price. 

Portland Housing Authority’s Voucher Homeownership Program
This is a unique program that acts as a voucher option. Essentially, the program allows aspiring homeowners to use their housing assistance (which would normally go towards rent) to go towards a downpayment and other housing costs. 

Bangor Downpayment Assistance
The city of Bangor offers homebuyer assistance that includes a downpayment program and a program specifically for closing costs. Both help buyers purchase a home within the city limits. 

Common Requirements for Maine Downpayment Assistance

Buyers in Maine will find a variety of requirements if they want to use downpayment assistance. The most common is an income restriction; buyers generally need to be low- or middle-income buyers to qualify. 

Some programs require that you bring at least a small amount of cash to the purchase. This might include 1% of the purchase price or at least $1,0000, depending on the program. 

For Maine buyers using the Multi-Unit Advantage program, you will likely need to live in the property for at least a short period. In other words, it can’t be used strictly for an investment purchase. 

Programs are constantly changing and DPA options are often adjusted, with old options canceled and new DPA programs created. For updated information on downpayment programs in your area, contact our team right away!