Mooers Realty Maine Real Estate Blog
First Time Buying A Home In Maine
First time buying a home in Maine?
Or too many moons ago since you bought your last house? Buying a home is a pretty big decision. It's not something most of us do very many times in life. How to help make the real estate experience exciting and successfu? Rather than a horror show of unnecessary high emotions and total frustration.
This helpful blog post will avoid sleepiness nights and lower anxiety levels for first time home buyers.
The mission in every single house listing is a short, smooth flight without turbulence. So the real estate sale transfer is suppose to be "home sweet home" successful.
Never forget owning is better than renting too. (Over and over it should be fade to black after long shot of a happy ending buyers holding a baby. A SOLD sign rider screwed on the top of the silent salesman out in the front yard.)
Seller moves out the back door. Rides into the sunset while the sweating home buyer is gruntiung and straining. Making trips back and forth through the front door. Unloading the van quickly hustling from the other direction. Carrying lots of heavy boxes ;abeled marked with a laundry marker of what goes where. The new home owner needs to scramble to get the truck emptied, their deposit back and to stop further rental charges.
What helps or hurts the home sale for a first time buyer?
The purpose of this real estate blog post is to share some important do's and don'ts to make buying your first home as trouble free as possible. To spell our what it feels like being a brand new house buyer. And how if you are in the dark on the process, you don't understand your role in the house buying time line.
This blog post hopes to set the expectations of what's ahead to prepare for getting your own set of house keys. To pull you up and out of the nasty rent rut.
First time buying a home in Maine?
Hold your houses.
Can you even get a bank mortgage loan?
It used to be find a house, then bee line to the bank and cross your fingers.
All that has flip flopped.
Walk into the lobby of the local bank first. Find out what is your credit score, how are those debt ratios looking. Which loan program do you qualify for based on your household income? Which house loan and property price / condition combination is the best fit?
# 1 This is the first step every first time home buyer needs to tackle, pre-approval for a home loan.
Because you can tramp through all the open houses in the World. Stay up way way too late watching virtual tour real estate videos. But if you are not in a financial position to buy, it is all a waste of time. Don't get home sellers all hot and bothered with a slew of offers to buy if you can't pull it off a house purchase today.
Pay off your existing debt to get ready to buy a home. You need to learn how much house you can afford before jumping into the multiple listings of what's for sale housing pool. Getting your hopes up to buy a home begins and ends with a bank mortgage loan approval letter.
Getting pre-approved for a home loan establishes how much money you can afford and impresses the seller of the home you fall in love with to buy. No one likes heart break. Dear John, Dear Jane rejection letters from a lender who turns you down, denies your home loan are not fun.
Save up your closing costs, a down payment to prepare for buying your 1st home.
Yes there are low and no down payment home loans out there.
But those are the most finicky and stressful to clear extra layers of underwriting hurdles to obtain.
More on bank financing for a Maine home. Here's why getting local bank mortgage lending makes the most sense to save time, unnecessary expense in the home buying process. In small rural Maine real estate markets, researching neighborhoods is not where time is spent. We don't have three hundred lot subdivisions in small Maine community settings.
So congratulations! It's doesn't hurt. It ends the unknown. You are pre-approved for a Maine home loan contingent upon the underwriting guidelines for you and the property. Woo hoo, somebody is going to stop writing those rent checks that's like cash in the trash.
But remember. Don't change jobs. Make sure not to get divorced if married. And refrain from any major item purchases that could mess up your pre-approval chances for this loan amount. No, don't spend a fortune even if that ten piece living room set or master bedroom collection seems like a whale of a deal. That spending on your credit charge could make an approved loan suddenly one turned down for lending. Debt ratios, credit scores... they are watched like a hawk by lenders like a patient on hospital beeping monitors.
There are three hurdles to buying a home. (Four if you have to sell a home before buying another one).
You need to be qualified for a bank loan. How much house you can afford has to consider property taxes, upkeep of 1.5% of the house price annually, and to insure the place. Heating it, mowing the yard and snow plowing are a concern in Maine's never a dull minute ever changing weather patterns.
The rule of thumb of one week's pay check is what you should be paying for housing is a good one.
It leave money left over for going to the movies, replacing and maintained your car and other luxuries like groceries, kids braces, saving for retirement and for future college expenses. A family is expensive so easy does it on what you want and what you can afford for housing. Be realistic and not champagne tastes on a beer budget.
The other formula to figure out what you can afford for a house to buy is two and a half times what you make a year.
I like the one fourth of your income route to play it safe though. Just because a bank says you can afford two or three times the house price range you want to shop in, don't do it.
If you get house poor and health changes, the economy tanks, you will not be up the well known creek without a paddle.
Also, when you save up twenty percent of the house cost for a down payment, you don't waste money on private mortgage insurance.
PMI is expensive, a lot like a finance charge on your credit card that eats away at your paycheck.
Maine is a very affordable housing state. Low cost homes are plentiful and the rule not the exception. So twenty percent down payment is more doable. House prices are a fraction of what you find in a high cost urban area.
FHA loans requires as little as 3.5% of the loan but the PMI is an expensive expense for the life of the mortgage.
Or until you get an appraisal to show the World, you do live in a house you are paying on that is worth more than eighty percent of the fair market value today.
VA loans require no down payment and certain fees are waived if you honorably served your company. A blend of a Maine State Housing (MSHA ) loan and rural development from the USDA or Veterans loan can be a smart move.
Fixed interest rates even if a tad higher work out better than adjustable rate home mortgage loans if you plan to stick around. If interest rates are high, get the best financing you can but buy, don't rent. Then re-finance to lower your monthly interest rate when you can.
Pay an extra monthly payment a year makes a huge difference toward saving interest and retiring your first time home mortgage.
And look into can you handle a fifteen, twenty year not thirty year mortgage note. Try having automatic deductions from your checking account every two weeks for a bi-monthly home loan instead of the traditional thirty day gotta make another payment standard route.
You want to NOT have a mortgage as soon as you can. You don't want to be a slave to the house payments. It takes belt tightening and determination like losing weight or getting more exercise. To get that home mortgage retired so you can live free and clear, without housing debt.
The property has to meet underwriting standards and anything not up to snuff needs to be corrected. The home has to appraise for the contract price, not just the mortgage amount the purchase and sale agreement has typed in the space.
The legal title to the real estate you want to buy has to be free and clear of liens or attachments.
The discharge of existing mortgage on the home you have your heart set on and any liens has to be removed before a bank will give you the money to buy it. A mortgage is put on the property with terms and conditions. These are recorded in the local registry of deeds for the World to see. You pay you stay. You don't you won't. It's that simple.
# 2 Questions, anything you are not sure about, talk to your Maine REALTOR, your local lender.
The two are vital partners navigating the journey to get to a real estate home closing. You share with them everything they ask and write down.
They in turn explain what happens next, after than, what happens if this does not. The pair have years of experience and know how to handle each unique home sale.
When it was save up twenty five percent of the house price and demonstrate you had good character worthy of a home loan, things it was pretty simple. Even a caveman could shuffle the paperwork. Now the flavors of mortgage lending are many. It is not one size fits all.
The Maine REALTOR and your mortgage loan originator together can explain which home in what price range matches up with your best best financing options.
You check your wish list. Put check marks beside or draw lines through your personal "gotta have / don't want" items. Then study which homes under consideration make the cut. To arrive at which house you are buying.
More often than not, the property sale is contingent upon bank financing. So the bank is going to say yea or nay to whatever you tell your family and friends you hope to be moving to in about six to eight weeks. That's the time frame to expect in a normal, plain Jane garden variety home buying situation using a bank. If there are no twists and dips to cause the sale to drag.
The bank lender determines your price range to fly in during your search for a home.
He or she issues your pre-approval letter to share with your broker and your home seller. The Maine REALTOR is someone you feel comfortable talking with and trust as knowledgeable answering your questions. He or she lets you now about new listings, price reductions and helps in your home search.
The Maine REALTOR will draft the purchase and sale agreement, convey offers to the seller and help mediate the sale so both parties agree to the final document that gets sent to the Maine bank loan officer and the lawyer picked for handling the attorney work.
# 3 The local Maine attorney who does the title search, reviews all the legal documents will hear from the close to home town Maine bank.
After the approval of the home buyer, once the appraisal valuation has been done and any defects to the property are corrected.The underwriting arm of the local Maine bank requests from your legal beagle a title opinion to make sure everything is on the up and up with clear, merchantable title. Or spelling out the discharge of a mortgage, the payment of last year's property taxes, etc that will need to be addressed before the Maine house loan to the first time home buyer can proceed.
After the clear to close memo is circulated start shopping for house insurance.
Ask the seller who they use for an insurance agent and how much coverage, what is the deduction of their house coverage. A pre-closing inspection to make sure the seller has really moved out to clear the way is just a smart move. To see with the buyer's own eyes if the rental tenant is still camping out at the home or not happens.
Damage to the premises since the buyer saw it last is noted on the walk throgh pre-closing inspection.
Debris left behind or new property repair needs popping up are addressed. You the buyer have a lot more leverage if the closing is delayed until the wrinkles are ironed out. After the sale good luck getting a seller to come back to fix this or clean out that
The buyer and seller are suppose to be working together but in reality that is not always the case. Elderly, sick sellers are not up on ladders putting a roof rain gutter back in place or scaping and painting decks. or trim.
Out of state home owners without the money to do the repairs means up front, a buyer will to take on those tasks needs to be determined ahead of time. Or concessions built into the purchase price are provided for in the contract of sale to hire the professionals doing them.
The home buyer, the appraiser, the home inspector, the attorney ... there are lots of cooks in the kitchen.
The property insurance agent will check the age of the roof, to see if there are smoke detectors or railings needed on the deck and stairways. Anything their insurance underwriting department brings up for issues will have to addressed for a property coverage binder policy to be available at the closing.
No insurance binder, no closing is going to happen with a bank loan on your first, second or however many financed homes you have racked up.
And an attorney for a buyer in a cash sale will point out a real estate closing should not happen until such time an insurance coverage binder is issued and in place.
The closing for the first time home buyer is best when the seller can sit at the same long conference room table eye to eye for sign here, here and one more place... (pointing) ... there.
But the deed, anything the home loan bank requires for documents to be signed and notarized can be generated. Sent out and returned in time for a closing without the home owner needing to be at the closing.
Documents like transfer tax forms, like a seller's affidavit indicating no work has been done on the property in the last 180 days that could end up causing a valid mechanics lien to be attached to the home. Everything can happen online and with the help of so many speedy delivery services to save expensive travel.
There are many tasks you as the home buyer can help out on with in the house sale.
To help assure your end of the process is handled correctly. But just as long a list of "outside your control"factors often creep in to a perfectly good house sale situation. To suddenly make it go sideways. Causing everything go haywire and potentially derailing your buying this particular home at this given time dream.
It is scary being a first time home buyer.
You may have a little nest egg saved and are all settled in and venturing out into the new obligations owning a place of your own. What if you lose your job? How would you make the payments? What if someone gets sick and the income is cut in half? Life is full of what ifs but remember. You gotta live somewhere whether you are fit as a fiddle or thrown a sickness curve. In Maine houses are affordable and cheaper than renting.
Like having a baby, there is a life change to adjust and prepare for ahead.
Just remember, a mortgage bank underwriter would not be making this loan if they did not believe you are a good risk and the property you are buying represents a solid investment. The home mortgage sounds like the rest of your life. When you see the total cost dollar figure you would pay if you only made the regular monthly installment and hung out here for the up to thirty year term.
Adjustments like maybe spending less on travel, not eating out so much and hanging onto your old car longer. Buying a home is self inflicted and your choice. Once you warm up to the rent to own shifting gears adjustment, see your kids playing in your new home back yard, the fear dissipates. After doing your income taxes and filling in new deduction spaces, you will see Uncle Sam is helping you buy this home.
What you owe on the home mortgage goes down every single house payment.
It is a saving bank. Rent goes up, your payment does not. If you buy when interest are high like my first home that was 12.25% fix rate in a time of 16.5% adjustable, you refinance when it becomes possible. Or are you even going to be in this same home in say five years time?
You can sell it, make a profit if you don't waste money on the improvements that your area rewards.
What are those improvements to affect resell did I hear someone ask? The Maine REALTOR stays in touch and is a valuable resource to guide your home improvements.
Also, if you saved for the closing costs instead of rolling them into a thirty year mortgage, you are financing less. The appraisal, the bank application fee, credit check charge, the attorney fees if paid from savings will mean you are running one tight financing operation. Mainers are survivors; frugal training starts in the crib.
I want to be a home buyer and seller's Maine REALTOR for life, not just one transaction. And if the buying, selling, trading is done knowing everything that could be done was. And communication was crystal clear on the expectations, there is no reason why repeat Maine real estate business should not happen in the trust that goes both ways.
Local home mortgage lenders in Maine are not hard to talk to or track down for answers to your many questions. They live in your local community and become friends you turn to whenever you need financing. Local Maine attorneys and title companies are the same kind of small town connection. You may serve on the same local community boards, know them from coaching sports or through even family connections.
Keeping the lending, the title work, insurance coverage makes for faster home buying, less expense. It does the local economy good too when you shop local with friends and neighbors. Where every dollar spend in your home town turns over six to seven times to help the local economy.
There are people involved in the houses we list and sell. The pressure of job transfer, having to sell because not a lot of money to burn all impact the size of the waves generated in a real estate sale. Keeping everyone in the boat headed to the closing is a honor and privilege.
I hope this blog post on first time home buyers is helpful.
Please reach out with questions that should be answered, not swallowed. First time home buying in Maine does not have to be a nightmare process.
A couple weeks ago I helped one of my four kids searching and finding her first home. In the Boston area, the house prices are a little higher and lots more rules and regulations. We tramped through several open houses, met neighbors and quizzed them.
Over forty years of matchmaking buyers and sellers with houses, other property types has taught me a lot.
But helping one of your sons or daughters find a home and explaining the process is one of the best gifts you can provide them in the shelter investment.
More than one in five of first time home buyers are single women. And twice as many unmarried women are buying homes than men according to the National Association of REALTORS.
The issues and how to handle them, making a buyer and seller happy by saving time and money.
Sure is and can become more expensive than it should be. Buying your first home that is full of unkowns and comes with a learning curve causing anxiety.
It is a process where the Maine real estate professional learns something new daily as they reinvent the buying and selling. It takes education, patience, asking questions, lots of guidance. It is what inspired this blog post on first time home buying in Maine.
MOOERS REALTY 69 North ST Houlton ME 04730 USA