Alabama Mortgage and Refinance Rates

related category image

Point of Interest

Mortgage and refinance rates in Alabama are at historical lows, which means this could be a great time to take advantage of Alabama homebuyer incentive programs or low refinance costs.

Although the population of Alabama is relatively small compared to its neighboring states to the north and east, when compared with salaries, the cost of living is quite affordable. Towns in Alabama are generally small and offer a nice place to live for those who don’t need or want the hustle and bustle of the city. 

Home prices in Mississippi are also reasonable, which has allowed about two-thirds of Alabama residents to become homeowners. Mortgage rates are reasonable and on par with nearby states, and the state of Alabama has several programs that help low- to mid-income earners achieve the American dream of owning their own home.

Getting a mortgage in Alabama

Alabama has affordable home prices, and that, coupled with low mortgage rate prices over the last decade, has made just over 68% of Alabama residents homeowners, according to these stats from the U.S. Census Bureau. The median price for a single-family home in Alabama is $137,200, which puts the monthly mortgage costs around $1,174. Having at least a 20% down payment will make it easier to qualify for a mortgage and keep the monthly payments reasonable.

Interest rates for mortgages and refinances are hovering between the mid-3% and mid-4% range for 30-year fixed-rate mortgages in Alabama. Going with a 15-year fixed-rate mortgage will bring the interest rate down a little bit, which is a great option for a refinance on a mortgage that’s a few years from payoff but could still benefit from a lower interest rate.

  1. Median home price: $137,200
  2. Average 30-year fixed rate: 3.82%
  3. Median monthly mortgage cost: $1,174
  4. Homeownership rate: 68.6%

Alabama state mortgage rate trends

Mortgage rates in Alabama are at historical lows. Data from Mortgage News Daily shows that for most of the 1970s, mortgage rates for 30-year fixed-rate mortgages stayed, on average, below 10%. Interest rates rose dramatically during the early 1980s, at one point hitting close to 18%, but then tapered off to the low teens throughout the decade. The 1990s saw interest rates drop to below 10%, and they fluctuated by a couple of points for the next two decades. Following the recession in the late 2000s, rates finally dropped below 5%.

Of course, the historical data for certain areas, mortgage products and refinances vary, just as they do today. However, this is arguably the best time in history to get a mortgage or refinance to a lower rate to lock in for the remainder of your mortgage. You will want to factor in your closing costs, but you could save thousands of dollars over the life of your loan.

Alabama state current mortgage rates

This is a great time to get a mortgage in Alabama, with current interest rates for a 30-year fixed-rate mortgage coming in at 3.82%. Spend some time to determine the right mortgage product for you. You might want a 15-year fixed-rate mortgage (currently at a rate of 3.19%), a 30-year fixed jumbo (currently at a rate of 4.00%) or an adjustable-rate mortgage (currently at a rate of 3.69%). A good loan officer can help you understand the differences and how they relate to your financial situation.

If you already own a home, refinance rates in Alabama are also quite low, with an average rate of 3.92%.

Most and least expensive places to live in Alabama

The majority of counties that rank among the least expensive places to live in Alabama are all sparsely populated, ranging between 13,000 and 23,000 residents per county. The more expensive counties, as you might expect, are home to larger cities with more jobs and higher home prices. No matter which county you choose to live in, you’ll find lots of southern hospitality throughout the whole state.

5 most expensive

  1. Baldwin County: Located along the southern coast of Alabama, the median price of homes currently listed in Baldwin County is $297,500.
  2. Lee County: This county shares a border with Mississippi, and the average list price for a home in this county is $255,900.
  3. Jefferson County: Situated right between the fourth and fifth most expensive counties in Alabama, the median list price for a home in this county is $235,000.
  4. Shelby County: Shelby County is in north-central Alabama and the median list price for homes in this county is $247,000.
  5. Tuscaloosa County: Jefferson county’s neighbor to the west, and the average list price for a home in this county is $208,800.

5 least expensive

  1. Lamar County: This county borders Mississippi and located on the northwest side of the state. The average list price for a home in Lamar County is $83,950.
  2. Crenshaw County: The small-town charm makes up for the lack of people, and the list prices for homes are low, too. The average list price for a home in Crenshaw County is $99,900.
  3. Choctaw County:  Choctaw County shares a border with Mississippi and has an average list price of $89,750 for homes.
  4. Conecuh County: Located in south-central Alabama, Conecuh is an affordable place to live, with a median list price of $64,700 for homes in this county. 
  5. Winston County: In the northwest, Winston has nearly double the population of the previously listed counties. The average list price for a home in Winston County is $90,800.

Alabama state mortgage resources and intricacies

The Alabama Housing Finance Authority offers homebuyer incentive programs that make it easier for low- to moderate-income earners to buy a home. The Step Up program offers down payment assistance on 30-year fixed-rate conventional or FHA mortgages for those who meet program qualifications. 

Mortgage Credit Certificates can be combined with the Step Up program, or used on their own, and can help qualified homebuyers reduce their federal income tax by 20% to 50% of the mortgage interest paid, up to $2,000. Additionally, there are checklists on what to look for when choosing a realtor and selecting a home. You can also take advantage of real estate license verification and numerous state and national programs for current and prospective homebuyers.

The Alabama Department of Revenue offers details about homestead exemptions that homeowners can use to lower costs. The website also has all the information that Alabama homeowners need to know about their property tax assessments and how to dispute them, if necessary.

The final word 

Now is a great time to become a homeowner due to favorable interest rates, no matter what part of Alabama you decide to live in. Research the best loans for your needs and take out a mortgage that’s within your budget. Finally, take advantage of any incentive programs the state of Alabama offers for new and current homeowners to get the most bang for your buck.