Alabama Mortgage Rates

Alabama was named as one of the hardest hit states for foreclosures in 2010 by the Obama Administration. Many Alabama homeowners are taking advantage of the Home Affordable Refinance Program (HARP) to refinance their mortgages. HARP, introduced by the Obama Administration and sometimes referred to as “Obama Refinance,” allows homeowners who owe significantly more on their house than the house is worth to refinance into a lower rate or shorter term mortgage, allowing borrowers to save thousands of dollars on their mortgages.

According to Freddie Mac’s second quarter 2012 refinance analysis, there are enormous benefits for homeowners who refinance. The typical borrower who refinanced reduced their interest rate by about 1.5 percentage points. On a $200,000 loan, that translates into saving about $2,900 in interest during the next 12 months.

And, according to the analysis, refinancing homeowners are reducing their interest rates in record numbers. The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.5 percentage points, or a savings of about 28 percent in interest rate — the largest percent reduction recorded in 27 years of analysis.

Changes in the loan-to-value portion of the HARP program means that a house can be worth significantly less than what was paid for it and the homeowner can still qualify to refinance under the program. An appraisal is not required under the program. In an earlier version of HARP, there was a 125 percent loan-to-value ceiling, that ceiling, which was proving to be a detriment to homeowners who wanted to refinance under the program, was eliminated this summer. In fact, borrowers in June and July 2012 with loan-to-value ratios greater than 105% accounted for more than half of HARP loans.

To qualify, a mortgage must be owned by Fannie Mae or Freddie Mac and it must have closed before June 1, 2009. In addition, you are not eligible if you missed any mortgage payments by more than 30 days in the last six months; however, after you make enough payments on time, you can become eligible.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% origination fee.