Mortgage Rates Maine: What Loan Options Do I Have?
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During the past year, the number of people moving to the State of Maine has increased considerably. This influx of residents has increased the competitiveness of the Maine housing market.
If you’re on a search for a home in the state, you need to be prepared. One of the best ways to prepare is knowing the local mortgage and refinance rates – allowing you to find the best-valued home deals.
We’ve compiled a guide about all the essential information regarding mortgage rates in Maine. We don’t just share the latest mortgage rates & APR, we also provide details about the state’s homebuyer assistance programs.
Mortgage Options In Maine
The average American homebuyer has three home loan choices to pick from. Each loan type has its own rate schemes and features. Here, we go in-depth on their details and specifics.
Conventional Home Loan
Conventional mortgages are any home loans not offered by government entities. Most of these loans are offered by banks and other private mortgage companies.
Conventional loans are subject to loan limits set by the Federal Housing Finance Agency. In all of Maine, loan amount limits are set at the national average of $548,250.
Conventional mortgages are broken down into three types. Here, we break down each of them.
Fixed-Rate Mortgage
As its name implies, a fixed-rate mortgage features an unchanging interest rate. The constant APR, rate, and predictable monthly payment amounts on these loans make them very popular with long-term financial planners and first-time borrowers. However, their rates & APR are usually higher than other loan types and you can’t lower them unless you refinance.
Most fixed-rate mortgages are offered in 30-year loan terms. However, 15-year and 20-year fixed mortgage terms exist that feature lower rates & APR with higher monthly payment amounts.
Adjustable-Rate Mortgage (ARM)
An adjustable-rate mortgage offers interest rates & APR that change annually. The ARM rate adjustment is based on the performance of a market index chosen by the lender.
These loans also offer an introductory period with a fixed rate. The lower ARM rate on these introductory periods make adjustable-rate mortgages good for short-term savings.
An ARM’s introductory period length is denoted in its name. For example, a 5/1 ARM has an introductory period of 5 years. Most lenders offer introductory periods between 3 to 10 years.
Jumbo Mortgage
Lenders provide jumbo mortgages to buy homes priced above loan amount limits. These loans allow you to exceed FHFA limits at the cost of a higher mortgage interest rate.
Government-Backed Loan
Several entities of the United States federal government offer mortgage programs. These mortgages typically have more affordable rates, low down payment, and specific qualification requirements.
The three major government mortgages are:
- FHA loans: Designed to boost the homeownership rate among low-income borrowers, FHA loans feature low mortgage rates and lenient credit score requirements. However, you need to pay mortgage insurance fees for the entire loan’s life.
- USDA loans: These loans are only available for homes in USDA-approved rural areas. If you qualify for a USDA loan, you’ll receive a zero-down loan with reduced mortgage insurance fees.
- VA loans: Created exclusively for military members, a VA loan features no down payment, no mortgage insurance fees, and no credit rating requirement. However, to replace mortgage insurance, you need to pay an upfront cost called a funding fee.
Mortgage Refinancing
When you refinance a mortgage, you’re taking out a new loan to pay off the previous one. Typically, you refinance loans to get better refinance rates or pay loans off faster.
If you choose to refinance your loan, you have two options:
- Rate and term refinance: This type of refinancing allows you to change your loan’s term and type. For example, you can shorten your 30-year fixed-rate loan into a 15-year to pay it off faster. You can also change your ARM into a fixed-rate mortgage to avoid unpredictable interest rates.
- Cash-out refinance: A cash-out refinance allows you to liquefy home equity. This is done by providing you a loan that’s larger than your current mortgage balance. Once your mortgage is paid off, any money left over is yours to use for other needs.
Current Mortgage Rates In Maine
Historically, mortgage rate trends in Maine have stayed close to the national average rates. For a comprehensive look at the most recent mortgage and refinance rates in Maine, we’ve compiled this table. The data in this table comes from America’s top mortgage lenders and will be updated daily.
Today’s Mortgage Rates in Maine
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Your Maine mortgage rates & APR may vary depending on your financial circumstances. The listed mortgage rate information may also change without prior notice.
For a customized look at your Maine mortgage rate, you can use the APR & rate tool at the top of this page. Just input your financial details and we’ll calculate a personalized Maine mortgage rate estimate just for you!
First-Time Homebuyer Programs In Maine
Entering the Maine mortgage market can be a daunting prospect, especially for new home buyers. Fortunately, the state offers several loan and down payment programs to give them an advantage over the competition.
To qualify for loan programs offered by the Maine State Housing Authority (MaineHousing), you need to fulfill these requirements:
- Complete a homeowner education course
- Meet credit score and income requirements
- Meet MaineHousing home price limits
MaineHousing First Home Loan
MaineHousing’s state mortgage offers you a 30-year fixed mortgage with little to no down payment.
This program also protects you from unemployment. With Maine HOPE, you can receive aid worth four times your monthly payment amount if you lose your job. This payment assistance comes in a zero-interest deferred loan that can be repaid once you pay off your main mortgage.
MaineHousing Advantage
Taking a MaineHousing FirstHome loan qualifies you for this assistance program as well. MaineHousing Advantage provides you with up to $3,500 worth of down payment and closing cost assistance.
Buying A Home In Maine
Homes in the Maine area move fast – which means you’ll experience stiff competition from other buyers. Spending too much time wondering what to do can result in you losing out on your dream home. To prevent that, we’ve compiled this guide to buy homes in six simple steps!
Step 1: Get Pre-Approved
Financial readiness is the first key to buying a house. One of the best ways to see it is by applying for a mortgage. Part of the mortgage application process is called pre-approval. During this step, the lender will check your financial health and determine your eligibility for a loan.
If you pass, you’ll receive a pre-approval letter. This document contains key details of your mortgage such as its maximum amount, loan term, mortgage APR, rate, and type, among others.
Step 2: Recruit A Real Estate Agent
It’s important to find a real estate agent with experience in the area. While their primary jobs are to show you homes and negotiate deals, you can leverage that experience to make research easier. They can advise you on key details of the area such as average property taxes, crime rate, and commute times.
Step 3: Look For Homes
We recommend you begin the house hunt from a neighborhood level. Choose a neighborhood that fits your lifestyle and budget.
Then, search home listings in the area and find the most affordable home that fits your needs. Even if you’re still under budget, any money left from the purchase can be used for home upgrades.
Step 4: Negotiate With The Seller
Likely, you won’t be the only one aiming to buy that house. To catch the seller’s eye and beat out other buyers, you can make a larger offer. Ask your realtor about how much above the listed home value you should bid.
Step 5: Take Due Diligence Steps
Doing your due diligence allows you to get peace of mind. Home inspectors can pinpoint issues in the home that may need repairs, while appraisers help determine the home’s actual value.
If you find any issues or find out the house is overvalued, you can still re-negotiate a deal before closing.
Step 6: Close The Deal
Before scheduling a closing date, be sure you have the money to cover your closing costs and lender fees. On the day itself, have your realtor advise you during the paperwork signing process about anything that may be unclear. As soon as the paperwork is done, it’s time to make moving arrangements.
How To Get A Better Mortgage Rate In Maine
Since mortgages are a long-time commitment, the smallest rate reductions can save you thousands. Here, we share three top tips on how to lower your Maine mortgage rates & APR.
Purchase Discount Points
Some lenders allow you to buy discount points. By paying for points upfront, you get a permanent mortgage rate reduction.
Typically, points cost 1% of the loan each and provide you a 0.25% rate reduction. For example, buying two points on a $300,000 loan with a 4% rate would cost you $6,000 and drive your rate down to 3.5%.
Since points may cost thousands of dollars, they’re best bought if you’re looking for long-term savings. Keep in mind that if you refinance, you’ll also lose the benefits of any bought points.
Get Shorter Loan Terms
Mortgage companies bear less risk on shorter loans – which is why they offer lower rates & APR for them. By shortening your loan, you’ll get better rates and incur fewer interest expenses.
However, you need to be ready for larger monthly payment amounts.
Work With Mortgage Brokers
Comparing loan offers from various lenders can be confusing, which is why some people choose to work with independent mortgage brokers. With their experience, a broker may find deals with lower fees and better rates that you may not otherwise find.
Closing Thoughts
With the influx of residents, competition in Maine’s housing market will continue to heat up. To find the best-valued homes, you need to know the local mortgage rates & APR.
Looking for the best mortgage for your Maine Home? Wesley LLC is here to help. Contact our team for mortgage resources and expert advice today!