Maine Mortgage Rates

Maine homeowners might not have air conditioned homes, but that doesn’t mean homeowners in Maine go without a mortgage. The property market in Maine is perhaps one of the best in the United States, with many finding its cool summers and beautiful country-side the best state to call home. We’ll run the numbers on Maine mortgage interest rates to see if living in Maine is right for you.

Mortgage Rates
Maine mortgage interest rates are set by banks not all that far from the pine tree state. Mortgage interest rates are primarily set by supply and demand, but rates for the nation’s largest banks, most of which operate out of New York City, set most of the prices for retail lending.

Homeowners can get an excellent survey of Maine mortgage interest rates by checking the Wall Street Journal. Published every week, the Prime rate, or the rate at which banks lend money to other banks, is the baseline price for mortgage interest. On top of the prime rate lenders add a small risk premium (lending to individuals is still riskier than lending to large companies) plus a little extra for a potential profit. In general, the Prime rate is marked up some .90% from the baseline rate to derive the interest rate for mortgage interest.

The borrowers with the best credit enjoy the lowest premium over prime rates. For example, while the Prime rate currently rests at 3.25% during the writing of this article, borrowers with excellent credit of 720 or more will enjoy a mortgage rate of only 4.15% fixed for 30 years. However, those who have less than stellar credit may pay as much as 6-7% for a Maine mortgage, which means their home loan payment will be significantly more each month to compensate for the additional risk.

Managing Maine Mortgage Rates
There are several ways you can work to reduce your mortgage rate. The first place to start, of course, is with your credit report. Working to repair your credit score will make you a more attractive candidate for a refinance, or new home loan origination. Plus, your credit score will improve your chances of getting a new job, as well as save you hundreds of dollars each year on all kinds of other finance products like home, life, and car insurance.

Furthermore, you might decide to save up a significant down payment in order to reduce you mortgage interest rate paid each year. A down payment is an amount you agree to pay towards the home at the time of purchase. Borrowers may put down as little as 3.5% for a standard FHA loan, however, borrowers who put down 10% will generally find a lower interest rate, and those who put down 20% receive larger discounts while avoiding costly private mortgage insurance.

Finally, consider borrowing money with an adjustable rate mortgage instead of a fixed-rate mortgage. Maine mortgage interest rates for 30 year fixed mortgages start at as little as 4% per year at the time of writing, however, adjustable rate loans are currently offered at a significant discount. A 5-year adjustable rate mortgage with a 30 year amortization is inexpensive, costing only 2.9%. Of course, those who go with an adjustable rate mortgage should be confident that rates will rise or stay flat, however they are compensated well with the interest rate differential. Additionally, any loan made under a 5/1 ARM platform will require that the owner refinance after five years, anyway.

If adjustable rate loans simply aren’t your ideal candidate, consider minimizing the duration of the loan. Whereas a 30-year fixed mortgage rate begins at 4.1% per year, a 15-year mortgage can be found for 3.25%, a significant savings over the long term. Plus, with a 15 year mortgage you’ll have the confidence to know that your home will be paid off entirely in only 15 years, saving you tens or even hundreds of thousands of dollars in mortgage interest, and 15 years of payments.