Last Updated on June 3, 2017 by Andrew Lee
Every single day, Maine residents awake to the sights of natural wonders, thanks to its scenic landscapes, like the Baxter Peak, the Appalachian Trail, and the Atlantic Ocean. The diverse climate – including all four seasons – make it even more interesting. And potential home buyers don’t just have Augusta, Portland, and Bangor (three of its top-ranking cities) to choose from; there are many other great areas to live and raise a family in. (Source: Livability.com)
The state also has a cost of living rate lower than a lot of other places in the United States, further adding to its list of features that attract property investors. (Source: Sperling’s Best Places)
Real Estate Property Values in the State
In the Pine Tree State, home values have a median of $177,600, as opposed to the countrywide median of $195,300. This means that real estate is slightly cheaper here than other parts of the nation. (Source: Zillow)
A 101 on the State’s Home Lending Process
Because ME is a “deed of trust” state, those who take out a mortgage most likely will receive a deed of trust from their chosen lending institution rather than an actual mortgage. They do this to avoid court procedures in the event they have to foreclose on properties. By issuing a trust deed in place of a mortgage, they don’t have to go through the court; they can just initiate a “power of sale” through the service of a third party.
What a 30-Year Fixed Mortgage Looks Like in the State
Most lenders here offer 30-year fixed mortgages, as majority of the state’s population prefer this less risky choice. For buyers who intend to live in the same house in the long-run, this is a good option. With this kind of mortgage, borrowers can expect their interest rates to remain the same throughout the life of the contract. They can also spread their payments over three decades, which will lead to lower monthly payments.
The 30-year fixed-rate mortgages in the state average at 4.5%.
How ARM Loans Work
If fixed-rate mortgages come with the security of locked-in rates, adjustable-rate mortgages (ARMs) have “movable” rates. This means that they can either go up or down, depending on the path the market takes. The key attraction to this type of mortgage though, is its lower initial rates, which the lender may apply on the first one, three, or five years. After this “teaser rate” period expires, it may become higher or lower.
ARMs or variable-rate mortgages here have interest rates averaging at 3.5%.
Reducing Chances of Having to Get Mortgage Insurance
Mortgage insurance basically protects lenders from the risk of not getting back the money they lent in the event the borrower defaults on the loan. The costs associated with purchasing and maintaining this can easily add up, making a home owner’s mortgage-related expenditures unnecessarily higher.
Fortunately, there are several ways to avoid having a lender require its purchase, and one of them is to meet the set amount of down payment for the house. Generally, this is 20% of the property’s selling price.
Home Buying Assistance
Not all people can easily qualify for a mortgage loan. And even some of those who do can have a hard time meeting down payment requirements or covering closing costs. Some may even find themselves in a situation wherein they might not make their monthly payment on time. In this case, there are several agencies that can extend a helping hand.
First off is the Maine State Housing Authority’s First Home Loan program. Designed to provide first-time buyers the help they need in purchasing a home, those who qualify can receive down payment and closing cost assistance of up to $3,500. The Purchase Plus Improvement program, on the other hand, offers an amount of up to $35,000 for the financing of a home. Those who qualify can also use some of the money for repair costs.
Maine State Housing Authority First Home Loan: http://www.mainehousing.org/programs-services/homebuyer/homebuyerdetail/firsthome
USDA Rural Development – Single family loans: http://www.rd.usda.gov/programs-services/all-programs/single-family-housing-programs
Home Affordable Refinance Program: http://www.harp.gov/