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An Introduction to Maine Mortgages
The housing market in Maine is on the rise. It used to be that the higher housing costs were on the coast. However, in the last few years, the inland housing costs have risen to meet the rest of the state. The median price is up 15% from 2004. It is speculated that this is due to the Baby Boomer generation’s desire for an increased standard of living. As their earnings have peaked, the Baby Boomers are choosing to upgrade. The housing market struggles to keep up with the condo boom despite Maine’s historically low interest rates.
What is different about Maine Mortgage and Housing?
In Maine, there is Lien Theory, or property security for a loan or mortgage. Effective Jan 1st of this year, a new law was passed to ease predatory mortgage lending. Brokers and lenders must now register with and pay surety bonds to the state.
What is the Average cost of a Mortgage in Maine?
An average cost of a home for the state is $98,000. In the more up and coming areas the average is higher. In one such area, Bangor, the average cost is $150,000-$200,000. The interest rates, which can depend on what type of loan is issued, are generally between 5% and 6%.
What types of Mortgages are available?
Some of the common mortgages currently include: Fixed Rate Mortgages, ARMs, LIBORs, and Interest Only Mortgages. A Fixed Rate Mortgage is a loan guaranteed not to change with the market. This type of loan is helpful for people who want fixed monthly bills and who plan to stay in the property for a while.
The Interest Only Mortgage is an alternative to the Fixed Loan. During the first part of the loan term only the interest is payed. Then after the first term the remaining balance is payed off. This rate is often higher than the interest, so this type of loan is not ideal for those with a fixed income who cannot pay higher sums after the Interest Only period.
An ARM, or Adjustable Rate Mortgage, is good for people not planning to stay in the home for a long time. This type of mortgage fluctuates with the market, however, lenders will limit how much the rate can rise. The rate may not exceed a 2% increase per year.
The LIBOR, or London Interbank Offered Rate mortgage allows banks to borrow money from other banks. Initially the rates are lower than most ARMs and offer fluctuation protection, but may increase later.
It is essential to know the different types of mortgage options as well as one’s credit score. This score will determine the interest rate of the loan on a more individual level. There are organizations that help consumers in choosing and funding a mortgage. Two of these organizations are: Mortgage Bank Association of Maine, and the Office of Consumer Credit.