Current Alabama refinance mortgage rates are trending below national averages. However, the refinance loan you choose will help determine your interest rate.
Current 30-year fixed mortgage refinance rates are averaging: 7.31%
The current average rate for a 15-year fixed mortgage refinance is: 6.76%
See whether refinancing makes sense for you using our mortgage refinance calculator.After reaching record-breaking highs in 2023, our mortgage rates forecast predicts interest rates will drop throughout 2024. However, rates will remain relatively high compared to pre-pandemic rates. Industry experts forecast the average interest rate on 30-year fixed-rate conventional mortgages to end the year around 6%, although unforeseen events can drive rates higher or lower. Mortgage rates in Alabama tend to sit below the national average.
Several factors determine your mortgage interest rate, and some of which are beyond your control — like economic trends, state laws and local foreclosure rates. Still, there are other factors within your control that can help you get the best mortgage rate:
When should I lock in my mortgage rate?After applying for a mortgage and comparing loan estimates, it’s best to lock in your mortgage rate with the lender you plan to move forward with. A mortgage rate lock protects you from rate increases before closing on your loan. Be sure to ask your lender what their mortgage rate lock terms are, including the fees to extend the lock if needed.
Alabama homebuyers have multiple resources for affordable mortgage financing and down payment assistance.
The Step Up program, offered by the Alabama Housing Finance Authority (AHFA), helps moderate-income buyers get an affordable mortgage and down payment assistance. This program combines a 30-year fixed-rate first mortgage with a 10-year second mortgage for the down payment; buyers make a single payment for both loans.
The first mortgage loan options include conventional, FHA or VA loans. The second mortgage is for 4% of the sales price, up to $10,000. Homebuyers must also complete a homeownership education course and apply through a participating lender.
Borrowers must:
Have a maximum income of $159,200
Have a 640 minimum credit score
Have a maximum 45% DTI ratio
Live in the home as a primary residence and occupy it within 60 days of closing
Another AHFA program, the Affordable Income Subsidy Grant helps borrowers with closing costs. The program is available to homebuyers getting a conventional loan through the Step Up program and whose annual income is at or below 80% of the Area Median Income (AMI) in their county of residence, as published by Freddie Mac. The grant is either 0.50% or 1% of the loan amount, depending on your income.
Borrowers must:
Have a household income at or below 80% of their county’s AMI
Have a 640 minimum credit score
Have a maximum 45% DTI ratio
Get a conventional loan through the Step Up program
The Mortgage Credit Certificate program reduces your federal taxes by providing a credit for a percentage of the mortgage interest paid each year. Borrowers can combine the MCC program with other AHFA programs or any 30-year fixed-rate loan offered by a participating lender. Tax savings range from 20% to 50% of your annual mortgage interest, depending on your loan amount.
Borrowers must:
Be a first-time homebuyer (or not have owned a home in the past three years)
Meet the program’s income limits
Purchase a home below the program’s sales price limits
Live in the home as a primary residence and occupy it within 60 days of closing
Alabama has multiple first-time homebuyer programs on the city or county level.
People who have never owned a home
People who haven’t owned real estate in the last three years
Buyers purchasing a home in Huntsville may be eligible for closing cost and down payment assistance up to $10,000 as a forgivable second mortgage through the City of Huntsville.
Borrowers must:
Be a first-time homebuyer
Meet the program’s income requirements
Purchase a home within Huntsville city limits
Live in the home for five years to receive total forgiveness
Homebuyers purchasing property within the City of Mobile can receive down payment and closing costs assistance up to $15,000 as a forgivable second loan.
Borrowers must:
Be a first-time homebuyer
Meet the program’s income requirements
Purchase a home within the program’s sales price limit
Occupy the home as a primary residence
Attend pre-purchase counseling and homebuying education
Live in the home for five years to receive total forgiveness
Homes must pass a Housing Quality Standards (HQS) inspection
Buyers purchasing a home in the City of Opelika may be eligible for closing costs and down payment assistance up to $6,000 as a forgivable second loan.
Borrowers must:
Be a first-time homebuyer
Meet the program’s income requirements
Purchase a home within Opelika city limits
Occupy the home as a primary residence
Live in the home for five years to receive total forgiveness
Complete homebuyer training
→ Alabama conventional loans. Conventional loans have fewer fees, better terms and lower borrowing costs than other mortgage types. However, their minimum requirements are stricter, as established by Fannie Mae and Freddie Mac. Conventional loans can be used to purchase or refinance a home.
→ Alabama FHA loans. FHA loans are easier to qualify for than conventional loans, with a minimum 500 credit score requirement and a 10% down payment — still, you can put down as little as 3.5% if your credit score is at least 580. You can use an FHA loan to purchase or refinance a home.
→ Alabama VA loans. Available to veterans, active-duty service members and eligible spouses, VA loans have no down payment requirement or ongoing mortgage insurance. They also include purchase and refinance options.
→ Alabama USDA loans. Moderate- and low-income borrowers purchasing in rural areas may qualify for the U.S. Department of Agriculture (USDA) home loan program. USDA loans have no down payment requirement and also offer purchase and refinance options.
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