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Compare mortgage rates in Maine.
Key Points
• Maine’s average mortgage rate tends to follow national averages, though the cost of living here is on the higher side.
• Mortgage rates in Maine are influenced by economic factors such as inflation, unemployment, and the Federal Reserve’s monetary policy.
• A higher credit score and larger down payment can result in a lower mortgage interest rate.
• Maine offers various mortgage types, including fixed-rate, adjustable-rate, FHA, VA, and USDA loans, each with its own benefits and requirements.
• The Maine State Housing Authority provides help for first-time homebuyers and first-generation buyers to make a home purchase.
Introduction to Mortgage Interest Rates
Securing a home loan is a crucial step in the homebuying process in Maine, and understanding mortgage interest rates is essential for making an informed financial decision. Mortgage rates dictate the interest fees charged by lenders for borrowing money to purchase a home. You may be focused on prevailing interest rates as you think about purchasing a home, but your credit score and the type of mortgage loan you choose will play a significant role in determining the interest rate you’re offered. Let’s look at how all of this plays out in the Pine Tree State.
Where Mortgage Rates Come From
The Federal Reserve plays a crucial role in setting short-term interest rates, which serve as a benchmark for other interest rates, including mortgage rates. While mortgage rates are not directly tied to Fed rates, they tend to follow similar economic trends. When the Fed’s interest rate is high, mortgage rates are likely to be higher as well. Lenders then adjust the specific rate they offer an individual borrower up or down based on the person’s financial data: credit score, income and asset levels, even how much of a deposit they plan to put down on a given property.
How Interest Rates Affect Home Affordability
Mortgage rates have a significant impact on home affordability. A seemingly small difference in mortgage rates can have a significant impact on average monthly expenses and home affordability. For instance, a one percentage point increase in interest rate on a $200,000 mortgage can result in an increase of over $120 in monthly payments. For a family on a tight budget, this could create a noticeable pinch. Moreover, in the 30 years it would take to pay off the loan, the borrower would spend more than $45,000 on additional interest.
Should Homebuyers Wait for Interest Rates to Drop?
Many homebuyers wonder if it is smarter to purchase a home immediately or wait for mortgage rates to decrease. This may be an especially challenging question if you are buying your first home and don’t have proceeds from the sale of a first residence to use as a deposit.
While waiting for lower interest rates may seem like a prudent strategy, it is essential to consider that interest rates are unpredictable. Delaying a home purchase also delays building equity in a home. And home prices could rise while you are waiting for interest rates to drop.
Remember that homeowners do have the option to refinance a mortgage if interest rates drop meaningfully after they make a home purchase. (It’s also worth looking into a refinance if your personal financial situation changes significantly — for example if your credit score increases.)
Maine Mortgage Rate Trends
Understanding historical mortgage rate trends in Maine can put current rates into context. Maine’s average mortgage rate tends to hover close to the national average. Take a look at how this plays out over almost two decades (2018 was the last year state averages were tracked).
| Year | Maine Rate | U.S. Rate |
|---|---|---|
| 2000 | 8.23 | 8.14 |
| 2001 | 7.01 | 7.03 |
| 2002 | 6.58 | 6.62 |
| 2003 | 5.72 | 5.83 |
| 2004 | 5.80 | 5.95 |
| 2005 | 5.95 | 6.00 |
| 2006 | 6.53 | 6.60 |
| 2007 | 6.38 | 6.44 |
| 2008 | 5.95 | 6.09 |
| 2009 | 5.00 | 5.06 |
| 2010 | 4.80 | 4.84 |
| 2011 | 4.51 | 4.66 |
| 2012 | 3.68 | 3.74 |
| 2013 | 3.76 | 3.92 |
| 2014 | 4.17 | 4.24 |
| 2015 | 3.88 | 3.91 |
| 2016 | 3.73 | 3.72 |
| 2017 | 4.06 | 4.03 |
| 2018 | 4.65 | 4.57 |
Historical U.S. Mortgage Rates
Homebuyers following current mortgage rates in Maine could also look at average U.S. mortgage rates over several decades to gain some perspective. Rates may feel high in the present, but they are still well below the numbers seen in the 1980s.
Factors Affecting Mortgage Rates in Maine
Numerous factors influence mortgage rates in Maine and nationwide. Some of these factors are economic, while others are entirely within the homebuyer’s control.
Economic Factors
• The Fed: As noted previously, the Federal Reserve’s federal funds rate serves as a benchmark for other interest rates, including mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, leading to higher mortgage rates. Conversely, a decrease in the federal funds rate can result in lower mortgage rates.
• Inflation: Inflation, or the general increase in prices, also affects mortgage rates. As inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. To compensate for this, lenders may increase interest rates.
• Unemployment: The unemployment rate is a metric the Fed watches closely. If unemployment rises, the Fed may lower interest rates to prompt an upswing in the job market.
Consumer Factors
• Credit score: A higher credit score indicates a lower risk of default for the borrower. As a result, lenders are more likely to offer lower mortgage interest rates to borrowers with good credit scores.
• Down payment: A larger down payment reduces the loan amount, which lowers the risk for the lender. Consequently, lenders may offer lower mortgage interest rates to borrowers who make larger down payments.
• Income and assets: Lenders consider employment history, salary, investments, and emergency savings when assessing the borrower’s ability to repay the loan. Borrowers with a stable income and sufficient assets are more likely to secure lower mortgage interest rates.
• Type of mortgage loan: Adjustable-rate mortgages (ARMs) often have lower initial rates compared to fixed-rate mortgages. Government-backed loans, such as VA mortgages, may also offer lower rates.
Types of Mortgages Available in Maine
Homebuyers in Maine have access to any type of mortgage they might need to suit their specific financial situation. Conventional loans are a popular choice and are offered by banks, credit unions, and other lenders. They can be fixed-rate or adjustable-rate. Conventional loans do not have a maximum allowable amount, although borrowers in Maine who need a loan for more than $806,500 will require a jumbo loan (more on that below).
Fixed-Rate Mortgage
With a fixed-rate mortgage, the interest rate remains the same for the entire loan term, typically 10 to 30 years. This provides peace of mind to borrowers, as they can accurately budget their monthly mortgage payments without worrying about fluctuations in interest rates. The choice of loan term does affect the monthly payment amount and the total interest paid over the life of the loan. Shorter loan terms result in higher monthly payments but lower total interest paid, while longer loan terms have lower monthly payments but higher total interest paid.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages offer lower interest rates than fixed-rate loans for an initial period, but after that time the interest rate can adjust periodically based on market conditions. This arrangement can be advantageous for homebuyers who feel fairly certain they will sell or refinance their home before the initial fixed-rate period ends. However, it is essential to be prepared for the interest rate to adjust upward after the fixed-rate period, and to have a plan for paying the bigger bill.
FHA Loans
FHA loans, backed by the Federal Housing Administration, offer more flexible eligibility criteria compared to conventional loans. They have more lenient credit score and down payment requirements, making them an especially attractive option for first-time homebuyers and those with less-than-perfect credit.
VA Loans
VA loans, offered by the Department of Veterans Affairs, are a unique mortgage option available to eligible veterans, active-duty military personnel, Reserve and National Guard members, and surviving spouses. These loans offer several advantages, including no down payment requirement and competitive interest rates. To determine eligibility, would-be borrowers need to apply to the VA for a Certificate of Eligibility. With that in hand, they can work with a participating lender to apply for the loan.
USDA Loans
USDA loans, backed by the U.S. Department of Agriculture, are for borrowers whose income falls below a maximum ceiling and who are seeking to purchase a home in a rural area. Favorable terms include no down payment requirement and competitive interest rates.
Jumbo Loans
Jumbo loans cater to borrowers seeking a mortgage that exceeds the conventional loan limit of $806,500 for a single-family property. The maximum conventional loan amount is set by the Federal Housing Finance Agency (FHFA) and changes annually. Jumbo loans, which are larger than this limit, are also called nonconforming loans.
Popular Places to Get a Mortgage in Maine
Securing a mortgage often depends on choosing the right location. The cost of living and housing prices vary across different locations in Maine, but the state as a whole is the 14th most expensive one in the U.S. with a cost of living that is 8 points above the national average. Here are some of the least (and most) costly places you might go home-shopping in Maine.
Least Expensive Locations
When compiling a list of the best affordable places in the U.S., SoFi looked at cost-of-living data and average home values, among other factors. Here are the Maine cities that ranked as least-expensive locations:
• Presque Isle: Set east of the North Maine Woods, this town of fewer than 10,000 people is known for year-round recreation in the beautiful outdoors. It’s also one of the less costly places to live in Maine.
• Gardiner: A small, historic community, Gardiner is attractive in part because it is within commuting distance of the state capital, Augusta.
• Waterville: Home to Colby and Thomas colleges, Waterville is also 11 points below average on cost-of-living rankings in Maine.
• Auburn: Half an hour north of Portland, Auburn is one of Maine’s more populous cities, but still small at around 25,000 people.
Most Expensive Locations
Easy waterfront access (whether ocean or a lake) is a hallmark of Maine’s most-expensive towns. Southport, Kennebunkport, Mount Desert, Brooklin, and South Bristol all boast beautiful views and average home selling prices north of $1 million.
Recommended: The Cost of Living in the U.S.
Tips for Securing a Competitive Mortgage Rate in Maine
Obtaining a competitive mortgage rate can save borrowers thousands of dollars over the life of the loan. Take these steps to get the best possible rate:
Compare Interest Rates and Fees
Shopping around and looking closely not only at interest rates but also at fees from multiple lenders is crucial for securing a good mortgage deal. It’s essential to inquire about both upfront costs and closing fees associated with the mortgage loan. These fees can vary among lenders and can impact the overall cost of the loan.
Get Preapproved
Having a mortgage preappproval demonstrates to sellers that the homebuyer is a serious and qualified buyer. It also enables homebuyers to move swiftly when they find a suitable property, as they have already completed a significant portion of the mortgage application process.
If you’re worried that interest rates may drift northward, consider locking in your mortgage rate. By paying a fee to the lender, you can secure the current interest rate for a specified period, typically ranging from 30 to 90 days. This provides peace of mind and protection against potential interest rate increases.
Maine Mortgage Resources
The state of Maine recognizes the challenges faced by homebuyers and provides several resources and programs to facilitate homeownership.
First-Time Homebuyer Programs
The Maine State Housing Authority First Home Loan program offers low fixed-rate mortgages with little or no down payment required. Homebuyers can apply through a participating lender.
Down Payment Assistance
Down payment assistance programs provide financial support to help homebuyers overcome the challenge of saving for a down payment. In Maine, the Maine State Housing Authority’s First Generation Program provides up to $10,000 for qualified homebuyers who have never lived in a home owned by their biological parents or legal guardians. The program is also available to borrowers who have been in foster care at some point in their childhood. Attendance at financial and homebuyer education programs are required to qualify.
Tools & Calculators
Maine offers a mortgage calculator to help homebuyers estimate their mortgage payments including insurance and property taxes. Or use one of these helpful calculators:
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in Maine
Homeowners in Maine have the opportunity to refinance their existing mortgage through a conventional bank or other lender. A mortgage refinance can help owners to secure lower interest rates and potentially save money. There are also government-backed refinance options for eligible borrowers:
FHA-insured homeowners can take advantage of the FHA Streamline Refinance program, which allows them to refinance with minimal documentation and without the need for a new appraisal. This simplified process enables homeowners to obtain lower interest rates and reduce their monthly mortgage payments.
VA loan holders have the option to pursue an Interest-Rate Reduction Refinance Loan (IRRRL) to lower their monthly mortgage payments. This program allows eligible veterans and military personnel to refinance their VA loans and secure a lower interest rate, potentially resulting in significant savings over the life of the loan.
Recommended: Do You Qualify as a First-Time Homebuyer?
Closing Costs, Taxes, and Fees in Maine
Homebuyers in Maine should be aware of the associated closing costs, taxes, and fees when purchasing a home. Closing costs in Maine typically range from 3% to 6% of the home’s purchase price. These costs cover various expenses related to the home purchase, including title insurance, appraisal fees, loan origination fees, and recording fees. The specific closing costs associated with a home purchase in Maine can vary depending on the property value and location.
The Takeaway
Maine’s mortgage landscape offers a range of options for homebuyers, catering to different financial situations and needs. Each loan type has its own advantages and disadvantages, and homebuyers should carefully consider their financial circumstances and long-term goals when selecting the most suitable mortgage option. Knowing current mortgage rates and exploring available assistance programs can help homebuyers make smart decisions in the land of lobster and lighthouses.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.FAQ
What is a mortgage rate?
A mortgage rate is the interest rate charged on a mortgage loan. It determines the amount of interest paid over the life of the loan and directly affects the size of the monthly mortgage payment.
Will mortgage rates drop in Maine?
Predicting future mortgage rate movements is challenging, and there is no guarantee that rates will drop. Economic conditions, inflation, and the Federal Reserve’s monetary policy influence mortgage rates.
Will mortgage rates ever go back to normal?
There isn’t really a “normal” where mortgage rates are concerned. They have fluctuated throughout history.
Will Maine home prices ever drop?
Real estate market conditions, including home prices, are influenced by supply and demand, economic factors, and local market dynamics. Predicting future home price movements is uncertain but a local-market expert (in the form of a local real estate agent) might give you some insight into what the future holds.
Is it a good time to buy a house in Maine?
The decision of whether it is a good time to buy a house depends on your personal financial circumstances and market conditions. Factors such as mortgage rates, home prices, and your long-term goals (both residential and financial) should be carefully considered.
How do I lock in a mortgage rate?
Borrowers can lock in a mortgage rate by paying a fee to the lender, which guarantees the interest rate for a specific period, such as 30 or 90 days. This can provide protection against potential rate increases.
How do mortgage interest rates work?
Mortgage interest rates are determined by various factors, including the prevailing economic conditions, inflation, unemployment, and the Federal Reserve’s monetary policy. Lenders use these factors — as well as each borrower’s individual financial metrics — to assess the risk associated with lending money and set interest rates accordingly.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process