Who Is MaineHousing and how do they finance mortgages?
MaineHousing is Maine's Housing Finance Agency. Created by the Legislature in 1969, MaineHousing offers programs that make housing more affordable for Maine people.
MaineHousing mortgages are financed with mortgage revenue bonds. MaineHousing bonds are sold to investors to fund the mortgages. Revenues from the mortgages are used to pay off the bonds. MaineHousing revenue bonds are currently rated AA+ and are a debt of MaineHousing, not the State of Maine.
MaineHousing mortgages are offered through a statewide network of MaineHousing lenders.
What are the advantages of a MaineHousing mortgage?
Some restrictions apply.
- Low fixed interest rates. Our mortgage interest rates typically are lower than market interest rates for similar products.
- Low point and no point options. MaineHousing offers both a zero point and a two point mortgage option.
- Little or no down payment. When a MaineHousing mortgage is combined with a government guaranty (FHA/RD/ VA) or with United Guaranty private mortgage insurance, little or no down payment is required.
- Down payment and closing cost assistance - Available to applicants choosing the Advantage option. Advantage can provide $3,500 toward the cash needed for down payment and closing costs. A minimum borrower contribution of 1% of the loan amount is required and may be a gift. Borrowers choosing Advantage also must take a hoMEworks-approved homebuyer education class prior to closing. The cost of the homebuyer education class counts towards the 1%.
- Purchase plus improvements in the same loan. Our Purchase Plus Improvements option allows up to $35,000 for eligible home improvements to be included in the total loan amount.
- Payment protection for unemployment. Maine HOPE (Home Owner Protection for unEmployment) makes 4 mortgage payments for eligible borrowers who become unemployed.
Who is eligible for a MaineHousing mortgage?
More people are eligible than you might think:
- First-time homebuyers
- Former homeowners who haven't owned for the past 3 years
- Qualified active duty veterans and retired military, regardless of past ownership.
While income limits apply, most Maine households are income eligible for a MaineHousing mortgage. Income limits vary by location and family size. To learn more, see www.mainehousing.org/homeloan.
How can the Quick Guide to MaineHousing mortgages help me serve my clients?
The Quick Guide is a one page summary of MaineHousing mortgage options. It includes information on loan terms, mortgage insurance options, down payment requirements, down payment assistance, eligibility, and more. It's intended to be a reference tool for you to answer client questions about mortgage options.
Does a MaineHousing mortgage take any longer to process and close?
Most lenders can process a MaineHousing mortgage as quickly as they can other mortgage options
Does MaineHousing still require the Seller to pay points?
MaineHousing offers both a no point and a low point option. If a borrower chooses to pay points to reduce the interest rate, the borrower can pay the points or negotiate with the seller to pay them.
Does MaineHousing have to "pre-approve" homes for financing?
There is no home preapproval or approval process.
As with other mortgages, a standard appraisal is required. If the borrower is combining their MaineHousing loan with FHA, VA, RD, or PMI mortgage insurance, the property must meet the requirements of those specific programs.
Purchase price limits apply, and vary by region, but the vast majority of homes sold to first time homebuyers in Maine fall within the purchase price limits. The purchase price limits are available online at www.mainehousing.org/homeloan.
Does MaineHousing lend directly to consumers?
MaineHousing does not do direct lending. MaineHousing offers mortgages through a statewide network of banks, credit unions and mortgage companies. We then purchase mortgages originated by our MaineHousing lenders. For a list of MaineHousing lenders, go to www.mainehousing.org/homeloan.
What is a federal Recapture Tax and should it be a worry for borrowers?
Because MaineHousing mortgages are financed by revenue bonds, borrowers are potentially subject to a federally imposed Recapture Tax if they sell their home within 9 years, and makes a profit on the sale of their home, and their household income has increased substantially. Most MaineHousing borrowers do not pay any Recapture Tax at all; others pay very little. To better understand Recapture Tax, seewww.mainehousing.org/recapture-tax-information
“**Important Note: Effective for loans closed on or after January 1, 2013, MaineHousing will reimburse borrowers for any recapture tax paid to the IRS.**
Download the Reimbursement Highlight document to learn more about this process.“
Please note that the Recapture Tax on a MaineHousing mortgage is not calculated the same way as it is on the USDA Rural Development's direct loan program.
Why should a homebuyer want a home energy audit?
Homeowners who make home improvements identified in a home energy audit may reduce energy consumption by 15%-20% annually. With MaineHousing's Purchase Plus Improvement option, homebuyers can include the cost of eligible improvements and the cost of the home purchase in the same loan.
In addition, energy efficiency incentives from Efficiency Maine plus federal tax credits can be worth up to $2,000. For more information see: www.efficiencymaine.com/at-home to learn more, or call 1- 866-376-2463.
How do I find out more about MaineHousing mortgages?
Visit www.mainehousing.org/homeloan for information, current rates, and a list of MaineHousing lenders. Also included is the Quick Guide to MaineHousing Mortgages, which provides a one page overview of MaineHousing mortgage options.
You may also call MaineHousing at 1-800-452-4668 and ask to speak with someone in the Homeownership Department.