Out of all the thousands of purchases you make in your lifetime, buying a house is by far one of the most expensive and life changing. Home buying requires a vast amount of research and planning, all orchestrated to perfection in order to ensure an optimal outcome: finding your ideal home at the best possible price.
Because of the tremendous complexity involved in buying a home, would-be homeowners need to do a substantial amount of research before pulling the trigger and purchasing their dream home. In this guide, we’ll walk you through everything you’ll need to know when buying a house in Maine.
Step 1: Evaluate Your Current Financial Situation
Most major life decisions require careful financial planning, and buying a home is no exception. Since most home buyers do not pay in cash and take on a 10- to 30-year mortgage instead, you’ll need to be sure that you can make the monthly mortgage payment every month for the long haul. Failure to do so can eventually lead to your lender foreclosing on your home, and you definitely do not want that.
So what’s the solution? Before you begin your home buying journey, make sure you have all your finances in check. Mortgage payments are not the only expense you’ll be responsible for: there’s also property taxes, maintenance costs, and utilities — and that’s not even taking the upfront costs into account.
Ideally, you’ll want to have a stable income source, a solid amount of savings, and a good credit score so that you can secure a mortgage with a reasonable interest rate. A good general rule is that you should spend no more than 35% of your monthly income on home expenses. As for your credit score: a score of 620 and above will give you access to a good number of financing options, but the higher the better.
Finally, you’ll also need to do some self-reflection and decide whether or not you’re really at a point in your life where you’re ready to settle down in one place for the next 10 to 30 years. While it is possible to change your mind and sell your home after you move in, it can be expensive, it’s not easy, and there’s no guarantee you’ll be able to sell it within a reasonable time period. Be sure you’re emotionally and personally ready for the huge commitment you’ll be making.
Step 2: Find a Great Maine Real Estate Agent
So, you’ve done some number crunching, pored over your finances, and you’ve decided you’re ready to move forward. Great! The next step you’ll need to take is finding an experienced and qualified real estate agent. Since sellers typically pay the buyer’s agent’s commission fee, you usually won’t need to pay anything to benefit from their services.
Your real estate agent will be the person that guides you through what can often be a long, arduous, and confusing process, rife with pitfalls and setbacks. But fret not: your realtor will be there every step of the way, explaining the process and answering your questions as you make your way through the procedure. They’ll also negotiate on your behalf and give you strategic advice on how to time the market, what areas to look in, and some can even offer you on-demand viewings (pro-tip: all Clever Partner Agents offer this service).
In addition to all this, Partner Agents also offer a $1,000 home buyer rebate to their clients in Maine. The rebate can be applied to closing costs, meaning Clever Partner Agents not only get you a better deal, but they’ll also get you a discount at the same time.
To find a Partner Agent near you, just fill out our form and we’ll be in touch shortly.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Step 3: Read Up on Local Real Estate Market Trends
While it may come as a surprise to some, choosing the right time to buy a home can have a major effect on the closing price. In most of the US, buying in winter will lead to better bargains, but fewer homes to choose from, while buying in the spring will give you a greater selection of homes, but a higher price tag on each of them.
Maine basically follows this trend, but with a slight alteration: homes sell for the highest price in the late summer. However, winter is still the ideal time to go house hunting if you’re looking for a great bargain. If you want a happy medium between reasonable prices and a good selection, aim for early spring.
Currently, the real estate market in Maine is red-hot, which spells trouble for buyers. The median home value is $233,000, but the median listing price is $240,000, meaning sellers are hiking up their prices since there is so much demand. If you want a bargain, you’ll definitely want to brave the elements and aim to close in winter.
However, because these trends can change so much from area to area, your best bet is to consult your real estate agent and get their professional opinion on when best time to buy is for your own unique situation.
Learn More: Will it Be a Buyer’s or Seller’s Market in 2019?
Step 4: Get Pre-Approved for a Mortgage
Next up is mortgage pre-approval. Many people confuse mortgage pre-approval and mortgage pre-qualification, so let’s clear up a few things:
Both mortgage pre-approval and pre-qualification have some similarities: both take a look at your financial situation including income, assets, and debt. However, the major difference is that the financial information required to get pre-qualified for a mortgage can be self-reported, while a mortgage pre-approval cannot.
Once you are pre-approved, the only step between securing the actual mortgage is choosing a house and getting it appraised so that the lender can be assured that the home will serve as adequate collateral for the loan. Mortgage pre-approval will give you a good idea of what your mortgage interest rates will be, allowing you to better refine your budget and focus on houses that are within your financial means.
Step 5: Start House Hunting
Now that you’ve been pre-approved for a mortgage, it’s time to hit the streets and go house hunting. The most important thing to remember during this phase of the home buying process is to stick to the budget you’ve set out for yourself.
Outside of that, this is one of the more fun parts. All you really have to do is decide what you want in a house — how many bedrooms, bathrooms, etc. — and try to find something that fits your budget. Going to open houses and viewings can help you figure out what your preferences by letting you see firsthand what you like and don’t like about different houses.
The hardest part (or perhaps easiest, if you have a set location in mind) is going to be deciding the area you want to live in. Different cities can have vastly different housing prices, so you’ll want to do some research on various regional markets within the state.
Your local real estate agent will be able to help you narrow your search down. As someone who works in your target market day in and day out, they’ll know what areas will be best for both your lifestyle and your wallet. Their input can be truly invaluable.
Learn More: Free House Hunting Checklist
Step 6: Make an Offer
After you’ve found a place that’s really wowed you, you’ll need to get in contact with the seller’s agent to ask whether they are currently accepting offers and if there are already any offers on the home. Considering Maine is such a competitive market right now, don’t be surprised if there are a number of offers on the home by the time you inquire.
You’ll need to decide what you’re willing to offer for the home, what conditions will affect your offer, and how much earnest money you’re going to put down. Typically, earnest money deposits are 1% to 3% of the list price, but can be more in highly competitive markets.
Your real estate agent will be your best friend during this process. They’ll help you draft a competitive offer letter that will give you the best chances of securing a purchase.
Learn More: How to Make an Offer on a House
Step 7: Inspections and Negotiations
If the seller accepts your offer, you’ll need to hire a professional to perform a home inspection. They’ll check whether there are any problems with the home, such as contamination, roofing problems, etc. They’ll also check the structure of the home, including plumbing, electrical, heating, and air conditioning systems.
If an issue does turn up during the inspection, you can negotiate who will pay for the repairs with the seller. Working with a real estate agent can be a big help here as they’ll be able to use their years of negotiation experience to gauge when to push a point and when to lay off in order to get the best deal.
Step 8: It’s Closing Time!
When all the negotiations are through, you’ll sit down with an attorney or title company and sign all the paperwork. At this point, you’ll need to pay all the closing costs, which can be fairly hefty.
In general, closings costs are about 3% of the closing price and include transfer taxes, escrow fees, mortgage origination payments, and a number of other expenses. Based on the median home value in Maine, $233,000, that comes to $6,990 — no small sum.
Luckily, if you work with a Clever Partner Agent, you’re eligible for a $1,000 home buyer rebate to help cover your closing costs (on homes over $150,000). Once all the paperwork is signed and the fees are paid, you’ll get your keys and be able to move into your new home. Congratulations!
To get in touch with a Partner Agent, fill out our form and we’ll be in touch shortly.