Beautiful scenery and a low cost of living mean that Vermont is an ideal place to live. Of course, you might need a mortgage to pay for it, and that’s where Benzinga steps in. We’ve thumbed through a lot of research to get you the best deals on mortgage rates in Vermont so you can save money — and do the things you love to do instead of worrying about your mortgage rate.
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Quick Look – Best Mortgage Lenders in Vermont
- Fairway Independent Mortgage Corporation
- Bank of America
- Vermont Federal Credit Union
- Guaranteed Rate
What is a Mortgage Rate?
The best mortgage companies in Vermont work with home buyers to connect them with the mortgage they need. Interest rates are some of the most important factors to consider. The mortgage interest rate refers to the amount the lender charges you in exchange for borrowing money for your home.
What Factors Impact Your Mortgage Rate?
Several factors affect the mortgage rates Vermont borrowers pay, including personal history and the overall economic situation. Understand the factors that affect your rate:
- The lender: Let’s say you shop 2 different lenders — you’ll probably get 2 different quotes on interest rates. Small, local lenders and credit unions tend to be more community- and member-focused. Large corporate lenders may not only be motivated to make a profit, but they also have to meet strict company standards when working with borrowers who have lower credit scores or incomes.
- Your creditworthiness: Lenders start by researching you with the goal of reducing their risk. The following factors impact not only whether you’ll be approved for the loan, but the percentage you’ll pay in interest.
- Credit score: Lenders pull your credit report before pre-approving you for a loan. The higher your score, the more likely you’ll be approved. A higher score will also earn you a lower interest rate.
- Debt-to-income ratio: Lenders use a formula to determine your ability to repay your loan. This takes your income and compares it to your debt levels. The lower the number, the lower your interest rate.
- Overall economy: Rates are likely to rise with the cost of living when the economy is strong. Demand for mortgages is also high when the economy is strong and unemployment rates are low, which gives lenders the luxury of bumping rates up to make more money.
- Loan-to-value ratio: Your loan-to-value (LTV) ratio, which is usually expressed as a percentage, compares the size of the loan you’re getting with the home you plan to purchase. Lenders use LTV to determine how much risk you present to them and also determine the types of loans you’re eligible for based on your down payment. It’s a good idea to pay off as many debts as possible in the months prior to applying for a mortgage.
- Down payment amount: You can increase the lender’s confidence in you if you’re willing to pay a significant amount of money toward your down payment at closing.
- Your cash reserves: Lenders like to see that you have enough money in the bank to cover your mortgage for several months if you suddenly lose your income. These cash reserves can be in savings other another accessible account — the amount you’ll be taking out for your down payment isn’t included in this cash reserve amount.
- Type of home: A lender is likely to give you a better interest rate if you buy a single-family home that serves as your main residence instead of a vacation home.
- Location of home: Interest rates vary not only from 1 lender to the next but also from 1 state to another. You’ll find that you’ll pay a different interest rate if you live in a state with a higher cost of living compared to Vermont.
What is a Mortgage Type?
Lenders offer a variety of mortgage products to their customers, but not all lenders offer the same mortgage types. Ask your lender whether it offers the following — and which option is best for you:
- Conventional: The most common type of loan is a conventional loan, which is backed completely by the lending institution (the lender takes a risk) and you may need to accept a higher interest rate or pay more for your down payment for a conventional loan.
- FHA: Many lenders for first-time buyers will steer you in the direction of Federal Housing Administration loans. The U.S. government backs FHA loans, which means if you default, the lender is protected.
- USDA: The federal government has designated certain rural and suburban areas of the U.S. to stimulate the housing market and backs loans for home purchases in those areas.
- VA: Former and active-duty military personnel can obtain government backing for part or all of the mortgage amount.
What is a Mortgage Term?
You’ll need to select a loan for a certain time period, whether you’re buying a home or getting a refinance quote. The most common mortgage terms are:
- 30-year fixed: This option stretches your payments over 30 years, which means your monthly bill will be lower compared to a 15-year fixed term. However, your interest will be higher to compensate the lender for the extra time and risk.
- 15-year fixed: Monthly payments are higher on a loan with a 15-year turnaround and you’ll usually get a break on the interest.
- 5/1 ARM: Some borrowers prefer this term, which locks in a low-interest rate for 5 years. At the end of the 5-year term, that interest rate adjusts to meet the current rate.
Current Mortgage Rates in Vermont
You likely know the economy can swing upward or downward quickly. When that happens, mortgage rates will often soon change in response. We’ll keep you updated on Vermont mortgage interest rates on a regular basis when you shop for a mortgage.
|Loan Type||Current Mortgage Rate|
|5/1 ARM (adjustable rate)||4.11%|
Calculating Interest in Vermont
There’s a home — and mortgage — to meet your needs whether you live in bustling South Burlington or a more rural neighborhood like Rutland. Interest is based on the amount you borrow and the number of payments you make. The formula lenders use is: A = P(1 + rt) — P is the money you borrow (principal) and r is the interest rate for the particular time period. Here are some examples of loan amounts and total interest for various areas throughout Vermont:
|City||Average Home Value||Loan Term||Current Rate||Monthly Payment||Total Interest Paid|
|South Burlington||$309,700||30-year fixed||3.80%||$1,443.07||$209,805.17|
Lender Credit Score Minimums in Vermont
Your credit score says quite a bit about you. Lenders can reduce their risk by analyzing whether you’re likely to pay back your loan. Generally speaking, you’ll need a score in the 600s or above, but the exact minimum varies from lender to lender.
|Lender||Minimum Credit Score Required|
|First California Mortgage||640|
|Caliber Home Loans||620|
|Bank of America||620|
5 Best Mortgage Lenders in Vermont
It can help to narrow the list of lenders before you get a purchase quote. Here are 5 lenders who operate in the state to help you make your list.
1. Best Overall: Fairway Independent Mortgage Corporation
Fairway Independent Mortgage Corporation (FIMC) has branches across the U.S., including Vermont.
This lender offers a wide range of loan options, from conventional, FHA, VA and USDA loans as well as varying terms for the loan type you choose.
2. Best for First-Time Borrowers: Bank of America
Bank of America offers competitive interest rates and a national reputation — it’s a leader in consumer banking.
First-time homebuyers will have access to specialized tools, including guides that walk you through the buying process.
Bank of America offers low down payment options if you’re a first-time homebuyer.
3. Best for Low-Income Home Buyers: Vermont Federal Credit Union
With options ranging from VA loans to adjustable-rate mortgages, Vermont Federal Credit Union is a popular local option.
Low-income borrowers also have access to special programs through the Vermont Housing Finance Agency (VFCU) that provide assistance.
VFCU also offers a program called SEED Money, which offers up to $7,500 in closing cost assistance for first-time homebuyers.
4. Best for VA Loans: USAA
USAA issues low-interest-rate loans to veterans and active-duty military and has locations across Vermont, including branches in Bristol, Fair Haven and Hardwick.
This combines the convenience of in-person service with the low rates offered to veterans nationwide.
5. Best for Online Loans: Guaranteed Rate
Nothing beats the convenience of an online lender, especially when getting pre-approved.
Guaranteed Rate promises competitive rates, whether you’re refinancing or buying your first home.
Guaranteed Rate also works with local lenders to give you the in-person support you need, especially at closing.
Land Your Dream Home
Getting quotes from lenders is the important first step to find the home of your dreams. Shopping multiple lenders will not only get you the best interest rate available, it’ll help you find the perfect lender to fit your unique preferences in Vermont and get you into your dream home.
Frequently Asked Questions
1) Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first-time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
2) Q: How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
3) Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!