Ever since the COVID-19 pandemic hit the US, Vermont real estate has been on fire – and in the best way possible. As the second least populous state, the Green Mountain State is perhaps the perfect place to stay socially distant from everyone. Its lush and relatively peaceful natural landscape also makes it an idyllic place for remote work.
But with low mortgage rates and increasing property values, competition is stiff right now. If you want to get the best deals on a home in Vermont, it’s essential to familiarize yourself with the local mortgage and refinance rates.
Here, you’ll find the latest mortgage rates and annual percentage rate, plus a helpful guide to possible loan options and first-time buyer programs.
Mortgage Options In Vermont
American homebuyers can choose from three main types of financing: conventional loans, government-backed loans, and refinancing loans. Let’s take a deeper look at each one:
Conventional Home Loan
Conventional home loans are loans issued by banks and private mortgage lenders. Conventional loans can be split into two categories, conforming and non-conforming or jumbo loans. Conforming loans fall under the amount limits set by the Federal Housing Finance Agency. For Vermont, the limit is set at $548,250.
A conventional loan can have either a fixed or adjustable interest rate. There are pros and cons for each type, so it’s important to know what you need and what you’re capable of financially before making a choice.
A fixed-rate mortgage consists of an interest rate and annual percentage rate (APR) that remains constant throughout the life of the loan. While fixed-rate mortgages are predictable – you’ll know exactly how much to set aside for your monthly payment – they often come with a higher interest rate and longer loan term than adjustable-rate mortgages.
Fixed-rate loans are commonly offered in 15-year and 30-year fixed loan terms.
Adjustable-Rate Mortgage (ARM)
As its name suggests, an adjustable-rate mortgage comes with an interest and APR that can fluctuate year-to-year. Typically, you’ll start with an introductory fixed period of five, seven, or 10 years. After the fixed period, your interest and APR may go up or down each year depending on market conditions.
ARMs are rather unpredictable, but they do come with lower interest during the introductory period compared to mortgages with fixed rates. Loan terms are also shorter, meaning you can pay off your loan in a shorter amount of time, build equity faster, and potentially save more money on interest.
Government-Backed Loan Programs
For first-time, low-income, and military veteran buyers, there are a handful of government-issued loan programs that come with affordable rates and low-to-zero down requirements. These include:
FHA loans: Issued by the Federal Housing Authority, FHA loans are designed for borrowers who don't have good credit. They’re characterized by low down requirements and competitive interest rates (and thus lower payments monthly). However, you do have to pay private mortgage insurance. In most of Vermont, the conforming loan limit for FHA mortgages is $356,362 up to $379,500 – save for Chittenden, Franklin, and Isle, which feature above-average limits. You can get an FHA loan for a multifamily or a single-family home.
VA loans: This type of loan is issued exclusively to active duty and retired members of the US military as well as their families. With a VA loan, you can expect low-to-zero down payment offers without the need for private mortgage insurance. The VA offers a variety of loan products, from 5/1 jumbo ARMs to 30-year fixed-rate terms.
USDA loans: This is a loan offered by the United States Department of Agriculture to low-income borrowers in rural, USDA-approved areas. USDA loans usually require no down payment and come with competitive rates and minimal insurance fees.
A mortgage refinance, also known as a refi, is a type of loan you can take to pay off an existing home loan. Most people refinance to lower monthly payments and interest or shorten their terms. Some people also use their home equity to stay afloat in a financial pinch, such as in the event of a loved one’s sudden death or hospitalization.
But take note, taking a refi does not eliminate your current mortgage balance. In fact, you may take on more debt when you refinance.
Another type of loan similar to a refi is a home equity loan. With this type of loan, you get cash in exchange for the equity you’ve built paying off your existing loan.
Current Mortgage Rates: Vermont
According to Zillow, the typical home value in Vermont is $287,191. Historically, Vermont rates have typically run just above or below the national average mortgage rates.
Listed below are today's mortgage rates and APR* in the state of Vermont. All rates and APRs are gathered from the top mortgage lenders in the US.
*APR = Annual Percentage Rate, which represents the annual rate the borrower is charged for taking a loan – plus fees. Like the actual rate, APR is expressed as a percentage. However, note that APR is not always an accurate representation of the loan’s overall cost, because it changes based on how long a loan is paid off.
Compare Mortgage Rates in Vermont
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Bear in mind that the mortgage rates and APR listed here may change without prior notice.
Your mortgage rates and APR are also determined by several personal financial factors, such as your credit score, home price and loan amount, down payment, loan terms, and loan type. Other factors include the location of your home and current inflation.
For a more in-depth and personalized look at your Vermont mortgage rates and APR, try our rate tool at the top of this page. Just input your financial details and we’ll calculate a customized Vermont mortgage rate and APR just for you!
First-Time Homebuyer Programs In Vermont
For first-time homebuyers, Vermont offers several homebuyers assistance programs through the Vermont Housing Finance Agency (VHFA), a nonprofit organization that has been around since the 1970s. Borrowers don’t need to be Vermont residents to qualify for a VHFA loan, but they do have to purchase and occupy a primary residence in the state within 60 days after closing.
Here are the other requirements for applying to VHFA's assistance programs:
Meet the minimum required credit score
Meet VHFA program income limits
Have no ownership interest in other properties
Meet purchase price limitations
Purchase a property that does not exceed 15 acres of land
Participate in a homebuyer education course
Aside from home purchase loans, VHFA also offers construction and permanent mortgage financing for developing affordable rental housing.
Through the VHFA MOVE program, first-time homebuyers receive VHFA’s lowest rates and lower monthly mortgage insurance for conventional loans. When signing up for VHFA MOVE, homebuyers can also:
Save up to $825 on Vermont Property Transfer Tax upon closing
Get up to $7,500 down payment assistance
VHFA Move MCC
The MOVE MCC program comes with up to $5,000 assistance with VHFA ASSIST and up to $825 savings on Property Transfer Tax. Eligible homebuyers also get a Mortgage Credit Certificate or a “federal tax credit up to $2,000 each year you live in the property and pay interest on your mortgage”.
With the ADVANTAGE program, you can get down payment assistance of up to $5,000 and save up to $825 on Property Taxes.
VHFA ASSIST Down Payment Assistance
This program provides first-time homebuyers with a zero-interest down payment loan. This loan is available to MOVE and ADVANTAGE-eligible buyers and must be paid off once the home is sold or the loan is refinanced.
How To Buy A Home In Vermont
Since the pandemic hit, real estate agents have seen more out-of-state buyers snapping up homes in Vermont than ever before. There’s a limited home inventory too, which makes house hunting in Vermont quite the challenge these days.
So if you’re set on competing in Vermont’s tough market, you’ve got to know what you’re doing – and you’ve got to act fast! Here’s a basic guide to home buying in Vermont:
Step 1: Find A Local Real Estate Agent
Whether you’re born and raised in Vermont or coming from out of state, it’s important to hire an agent who knows the local landscape like the back of their hand. Agents will find the best houses in your chosen part of town and will do all the research for you.
When looking for an agent, look out for:
Reviews and complaints from previous clients
Experience selling houses in your desired town or neighborhood
Knowledge of the local landscape (school system, upcoming developments, housing trends, yearly events and activities, local politics, etc.)
Years in the industry
Transactions made in the past year
Step 2: Get Pre-Approved For a Mortgage
In most cases, you’ll need a mortgage pre-approval letter before you can get sellers to take you seriously. A pre-approval letter is a vote of confidence from a mortgage loan officer that you have the financial capabilities to handle the loan amount.
The pre-approval process involves an assessment of your credit report, debt-to-income ratio, income, employment history, and assets and liabilities.
Step 3: Get Hunting
The best way to start your house hunt is to search by neighborhood. Ask your agent about neighborhoods that are compatible with your budget and your lifestyle. It’s also a good idea to have a list of “must-haves” and “nice-to-haves” so your agent can pare down your options further.
Tip: Pay attention to the current housing inventory in your area. If you find that you’re checking out houses at a time when the inventory is low, don’t expect to find your dream home right away.
Step 4: Lay Down A Good Offer
Once you’ve decided on a house, it’s time to make your offer. It’s a good idea to ask your realtor for advice on the appropriate range, as you want to avoid underpaying and losing to higher bidders – or, worse, overpaying.
If you can’t decide how much to offer, check out the rates for similar properties in your chosen area or ask your agent. Don’t forget to factor in the costs of renovating and repairing your prospective home.
Step 5: Hire A Property Inspector And Appraiser
Once your offer has been accepted, your next step should be to seek a property inspection and appraisal.
A property inspector will scope out potential flaws in your chosen home, and let you know which areas need repairs. They’ll look at things like the heating and cooling systems, plumbing, electrical, and the integrity of your walls, roofs, basement, and attic.
An appraiser, on the other hand, will help you determine your property value. If your appraiser gives you a lower appraisal, you can use this to negotiate the final price with your seller.
Step 6: Close The Deal
Once you’re ready to close the deal, make sure to have enough money to cover not only the principal amount and your down payment, but the overall borrowing costs. Never close a deal without an agent, as they’ll help you understand key points in the paperwork and look out for any shady clauses.
How To Find Better Mortgage Rates In Vermont
Mortgage rates are considerably low in Vermont these days, but it doesn’t mean you should settle for whatever number they give you initially. Here are some tips for lowering your mortgage rates:
Complete Homebuyer Education And Counseling
If you’re applying for a VHFA loan, make sure to complete education and counseling for homebuyers. This is a requirement for all VHFA qualifying applicants and should be done within 18 months before closing.
Go For A Shorter Loan
It may seem easier on the wallet to take a long loan as you can space your money out over more years, but there are fewer risks and lower overall costs involved with shorter loans. Although you’ll pay a larger monthly payment, you’ll pay less in interest – saving more money in the long run.
Don’t Rule Out Discount Points
According to the Consumer Financial Protection Bureau, discount points “let you make tradeoffs in how you pay for your mortgage and closing costs”. By paying an upfront fee at closing, you can lower your interest rate and, in effect, your monthly mortgage payments.
Generally, points are worth 1 percent each and give buyers a 0.25 percent rate reduction, although this may vary by lender.
The Vermont mortgage market is a competitive place. If you're looking to buy your first home, it's important to understand your options, as well as any potential pitfalls before making a decision. That's why we've put together this guide to today’s rates, plus helpful hints for how to buy a house in Vermont with confidence.
Curious about today's mortgage rates and refinance rates in other states? Want to learn more about the mortgage process? Or even find the top lenders in your area? Wesley LLC is here to assist you with all personal loans and financial matters. Contact us today for advice on everything from mortgage lenders to life insurance premiums and providers.