Homebuyers in Maine have the peace-of-mind that comes with regulations meant to help them, such as requiring sellers to disclose certain information about their homes and that an attorney represent the buyers at closing. Some homeowners may also qualify for property tax exemptions that could make buying property in Maine more affordable.
In Maine, every seller must disclose potentially hazardous or harmful defects in their property even if they are selling it “as-is” and won’t be making repairs. Maine sellers must also disclose information about the heating and air conditioning system, the insulation in the home, the source of water, the system for waste and sewage disposal and any material defects and environmental hazards.
The state also requires an attorney be present at all real estate closings to represent the buyer. The buyer can choose the attorney, but the lender still decides who handles the loan closing.
Maine is one of many states that requires a judicial foreclosure, which means a foreclosure must go through the court system. According to state data, the foreclosure process in Maine typically takes 10 to 16 months. Buyers can request free mediation at the courthouse. Maine’s laws allow a lender to request a deficiency judgement; so even after a foreclosure, the former homeowners could be liable for some of their debt.
Maine is an equitable distribution state, which means if homeowners divorce, their property has to be divided in a fair way. The law does not require a 50/50 distribution of the property, so spouses can decide how they want to divide ownership; or, if they cannot agree, a judge will determine it for them.
In Maine, real estate transfer taxes are typically paid one-half by the seller and one-half by the buyer. The transfer tax is currently $2.20 for each $500 in property value. So, for example, if you buy a $200,000 property, the transfer tax would be $880, or $440 for each side of the transaction. Your mortgage lender will disclose the exact amount of transfer taxes that must be paid once you have identified the property you want to buy.
Property taxes vary by individual counties and cities and are based on the assessed fair market value of your home. The average tax assessment by counties in Maine is 1.09% of the home’s value. Statewide, the median property tax assessment is $1,936 annually.
In Maine, property taxes are the responsibility of the person who owns the property on April 1, so it’s important for buyers and sellers to be aware of this date when transferring real estate. Different jurisdictions have various due dates for taxes, so buyers and sellers should make sure their property tax obligations are appropriately handled during the year when the property transfers ownership.
Maine offers several exemptions for property taxes. Under the Homestead Exemption, homeowners who have owned a property that is their primary residence for at least 12 months may be eligible for up to $20,000 as a property tax exemption. The amount may change based on the municipality’s assessment of your home’s value. Additional exemptions include up to $6,000 for war veterans 62 or older, those receiving a 100% disability as a veteran or those who became 100% disabled during their military service. Veterans who received a federal grant for adapted housing may be eligible for a $50,000 exemption. Blind homeowners may be eligible for an exemption of $4,000.
Some Maine residents may also eligible for an annual Property Tax Fairness credit of up to $750 (or $1,200 if you are 65 or older) if their home is their primary residence. However, there are income limits on the credit, and the amount paid in property taxes must be greater than 6% of your total income for that tax year.
The conforming loan limit throughout Maine is $484,350 for the purchase of a one-unit home. Conforming loans meet guidelines and limits established by Fannie Mae and Freddie Mac, two government-sponsored enterprises that work to make the mortgage market more stable and affordable. Conforming loan limits vary according to the housing market in different states or counties, and they generally offer the best interest rates for buyers with good credit. Loans for amounts above the limit are called jumbo loans, and they are typically more difficult to qualify for since some lenders consider them riskier. Jumbo loans also tend to come with higher interest rates.
First-time homebuyers in Maine and repeat homebuyers may be eligible for low-interest-rate loans or other programs designed to support homeownership in the state.
MaineHousing provides mortgages with low, fixed rates for first-time buyers, and it discounts the rates by 0.25% for active-duty military personnel and veterans.
The low-interest loans are restricted to borrowers with incomes of $68,100 to $105,100, depending on their household size and location. In addition, the agency offers programs to help people replace a mobile home, recover after a disaster and finance homes located on tribal land.
Learn more: MaineHousing
Maine HoMEworks provides homebuyer education classes to prepare prospective homeowners with the financial tools they need to buy property.
The homebuyer classes are open to anyone who wants to learn more about the homebuying process.
Learn more: Maine HoMEworks
In addition to these state-specific homebuyer programs, Maine homebuyers may also qualify for programs offered by national organizations.
Habitat for Humanity builds homes with the help of volunteers for families in need.
Homebuyers must apply to their local Habitat for Humanity program, meet income qualifications and work on the home themselves.
Learn more: Habitat for Humanity