|7/1 ARM (adjustable rate)
|5/1 ARM (adjustable rate)
Maine’s real estate market offers thousands of possibilities. You’ll need to research mortgage lenders to get the best rate possible — and Benzinga can lead you through the process. Let’s get started.
Best Mortgage Lenders in Maine for Rates
Your search for a mortgage lender should start with a list of some of the best in the state. Here are a few to help get you started.
What is a Mortgage Rate?
Have you ever borrowed money before? If so, you were probably charged interest. On a home loan, that interest rate is called a mortgage rate. Like other loan types, a mortgage rate is a percentage of the total amount you borrow, which is known as the principal.
Before you sign on the dotted line, get a purchase quote. A purchase quote will give you an idea of the rate you’ll pay. You can ensure you’re getting the best deal possible when you get quotes from multiple lenders.
What Factors Impact Your Mortgage Rate?
It can help to understand what goes into the rate you’re quoted before you choose a mortgage lender. You’ll likely find the rates you’re quoted are within a similar range, and that’s because lenders base their quotes on the same basic list of factors:
- Supply and demand: Like any business, lenders adjust their pricing based on demand. When the housing market is slow, they’ll drop rates to attract business. As it picks up, they’ll increase rates to make the most profit possible.
- Competition: The mortgage rates Maine lenders set will inevitably be influenced by what other lenders in their area are charging.
- National economy: Inflation rates affect the price you’ll pay for everything, including interest on a home purchase. Lenders will want to make sure they’re making a profit, so their rates will increase as the value of the dollar drops.
- Local economy: There’s no denying the local economy has a direct impact as well. Lenders will see more demand and adjust their rates upward if unemployment rates are low and the housing market is thriving.
- Location: Just as housing prices vary from one area of Maine to another, so do interest rates. The demand for mortgages will be stronger in some cities than others. You may find a better deal on interest in a more rural area of the state than in a busy, in-demand metropolitan area.
- Home price: You may find you’re quoted a higher interest rate if you buy a home that’s especially expensive. On the other hand, very affordable loans sometimes qualify for special programs that keep interest rates low.
- Type of loan: There are several mortgage types you can get when you shop for a loan. Lenders will want to know the length of time you’ll take to repay the loan, for instance. You may also qualify for a government-backed loan that offers lower interest rates and more flexible qualification requirements.
- Your own financial standing: The rate you’re quoted won’t be exactly the same as the next person. Here are a few borrower-specific factors that determine rates:
- Your credit score: Your credit history is tracked by various credit bureaus, which each assign you a score. This score drives the initial rate you’ll be quoted when you request pre-approval.
- Your income and debt: Lenders look at something called a debt-to-income (DTI) ratio, which measures the amount of income you have against your debt levels. The lower this ratio, the better the rate you’ll typically see.
- Your down payment: Lenders want to see that you have a stake in the purchase. You’ll at least be required to pay 3% of the purchase price at closing, but that rate can go as high as 10%, depending on the type of loan. You’ll have to pay for private mortgage insurance (PMI) if you put less than 20% down, which is incorporated into your monthly payment and covers your loan if you default.
What is a Mortgage Type?
There’s more than 1 type of mortgage and each has its own unique requirements and features. Here are the 4 main types:
- Conventional: This type of mortgage isn’t backed by the federal government, which means the lender is completely on the hook if you stop paying the loan.
- FHA: The Federal Housing Authority insures loans, which allows lenders a little more flexibility in credit and down payment requirements.
- USDA: The U.S. Department of Agriculture backs USDA loans, which are typically in non-urban areas.
- VA: Veterans, military members and their families can qualify for special interest rates and zero down payments on loans backed by the Veterans Administration.
What is a Mortgage Term?
You’ll be asked to choose a mortgage term when you buy a home. A mortgage term refers to the length of time you’ll take to repay the loan. Here are the most common mortgage terms on the market.
- 30-year fixed: Your monthly payments will be lower when you choose to take 30 years to repay your loan compared to 15 years. However, you’ll pay more in interest if you opt for a 30-year term.
- 15-year fixed: A 15-year loan means your payments are stretched over a much shorter time frame. Your monthly payments will be higher but you’ll pay less in interest.
- 5/1 ARM. Unlike fixed-term loans, an adjustable-rate mortgage changes over time. A 5/1 ARM means you’ll have a fixed low-interest rate for the first 5 years, which will then adjust to match the current interest rate.
Current Mortgage Rates in Maine
As you shop the best mortgage companies, you’ll find you have plenty of options. Rates can change from day to day, especially if the economy is turbulent. We make every effort to provide the latest mortgage rates to you to help you find the best deal. Here’s a list of the average current mortgage rates for various loan terms in Maine.
|7/1 ARM (adjustable rate)
|5/1 ARM (adjustable rate)
Calculating Interest in Maine
Let’s say you buy a $300,000 home with a 3% interest rate. Your interest due won’t be $9,000 stretched over 30 years of monthly payments. Instead, lenders use a process called amortization, which means they recalculate the interest based on the amount you owe over time.
You’ll pay more in interest in the early months of a 30-year loan, but you’ll gradually chip away at the principal. That means your lender will adjust the interest based on the new, lower principal amount you owe. Here’s a sample of the total interest you’ll pay over a 30-year period for various purchase amounts.
|Average Home Value
|Total Interest Paid
Lender Credit Score Minimums in Maine
Your credit score requirements depend on the type of loan you choose. Lenders for first time buyers can steer borrowers toward FHA loans, which have lower credit score requirements. You’ll usually need to have a credit score in the 600s or higher to qualify for a conventional loan.
The exact credit score minimum varies from lender to lender. Here’s a sample of several popular Maine lenders and their minimum requirements.
Buy a Home in Beautiful Maine
There are plenty of reasons to live in Maine, from its beautiful scenery to the tasty local food. You’ll be able to tap into plenty of great lenders if you’re buying or getting a refinance quote in Maine. Shop around so you can pinpoint exactly the right lender to finance your mortgage.
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