Written by Joseph Ferris
Lewiston-Based Androscoggin Bank Leads the National Banking Industry with Innovative
New Mortgage
Home ownership was supposed to be the path to real wealth-building in the United States. Unfortunately in the housing crisis of 2010, because of 30-year loans with slow amortization and loose underwriting standards, it created the perfect storm for a housing market collapse. Fortunately, here in Androscoggin County and across Southern Maine, the housing market is on the mend. Even with increased real estate activity, there is still a perception that the 30-year loan is the most affordable option for the average buyer.
“It is our strong belief that banking institutions should be the problem solvers.” Paul Anderson, President & CEO
Androscoggin Bank, a community bank based here in Lewiston since 1870 with a growing presence across Southern Maine, is earning recognition for developing an innovative new mortgage product that helps both homebuyers and banks prevent the result of the previous housing collapse. The Wealth Builder Home Loan is Androscoggin Bank’s unique mortgage product that gives Mainers a path for building wealth through homeownership while insulating consumers from the effects of previous housing collapse – and Androscoggin is the first Bank in the U.S. to offer anything like it.
An Innovative Solution To The Housing Crisis
According to Paul Andersen, President & CEO of Androscoggin Bank, “We saw how devastating the housing crisis was for homeowners. We are the first bank in the U.S. to offer an innovative mortgage that helps homeowners build equity much faster than a traditional 30-year loan. It’s our strong belief that banking institutions should be the problem solvers.” With faster amortization and monthly payments almost as low as 30-year, fixed rate loans, Androscoggin Bank’s Wealth Builder Home Loan allows homebuyers to build up equity and take ownership of their homes early on in the process.
The Wealth Builder Home Loan is unique in that it helps buyers gain complete ownership of their homes by year 15 without putting down a substantial down payment. With no mortgage insurance (PMI) and availability to both first-time and repeat homebuyers, this fast-building equity loan leaves buyers in a better position and less likely to leave their mortgage and contribute to a future housing crisis. It is also available for homeowners with limited equity who want to refinance a single-family home.
How The Wealth Builder Home Loan Works
The Androscoggin Bank Wealth Builder Home Loan offers buyers an avenue to real wealth-building by allowing them to start paying down the principal very quickly compared with traditional loans. It is not only a tool for wealth-build-ing—it is also safer for both the homeowner and the Bank. Wealth Builder Home Loan clients open an account at the Bank with direct deposit and automatic loan payment, which optimizes loan safety without the need for a large down payment.
With a 15-year Wealth Builder Home Loan, the homeowner sees, on average, an 80 percent loan-to-value (LTV) ratio after just 40 months of payments. By comparison, a similarly low LTV ratio would take over nine years on a traditional 30-year mortgage.
The 15-year Wealth Builder Home Loan is serviced entirely in-house, right at the Bank’s operations center downtown. This is great news for our local economy and for consumers, too. With local decisions and processing, you’ll always know where you stand and will always be able to reach someone who can answer your questions, whether it’s during the application process, or nine years into the loan.
How the Wealth Builder Loan is Unique From Other 15 Year Loans
There are, of course, traditional loans that have shorter terms of 15 years. But these loans tend to come with higher payments, both monthly payments and the down payment. The Wealth Builder Loan offers a simple “two-step” rate, with a lower fixed rate for the first seven years and a higher fixed rate for the remaining eight years. And even though there is a rise in the interest rate at the eight year mark, this new interest rate only applies to the amount still owed—not the full original amount of the loan.
Many loans require private mortgage insurance (PMI) if you fail to pay the typical 20 percent down payment upfront. This is an insurance that protects the lender in case of a foreclosure. According to Bankrate.com, PMI fees vary from 0.30% to 1.50% of the original loan amount per year. The Androscoggin Bank Wealth Builder Home Loan is unique in allowing homebuyers to avoid both the hefty down payment and private mortgage insurance altogether.
Learn more about Androscoggin Bank’s innovative new Wealth Builder Home Loan at androscogginbank.com.
Androscoggin Bank is a staple institution, with a 146 year history in Lewiston. The bank is member FDIC and an Equal Housing Lender.