Tuesday, January 15, 2008

How to Get a Mortgage in Alabama


Bound for Alabama? Obtaining a home mortgage loan can be a daunting process. But if you learn the process, and then break it down into steps, it's pretty easy to manage. Here are a few steps for getting an Alabama home mortgage loan.


Difficulty: Moderate



Step One

Get a copy of you credit report and check for any mistakes. Clear up any blemishes before applying for a loan.

Step Two

Spend some time researching the type of lender that you want. Credit unions, private banks, online mortgage companies, mortgage brokers (individuals and agencies that arrange financing for borrowers with a variety of lenders) or state and federal programs.

Step Three

Know that in Alabama, mortgage brokers are not required to be licensed. In addition, they require no specific education or experience requirements. Ask the broker for references to ensure that the broker is legit.

Step Four

The state of Alabama has no state-wide lending laws to protect consumers from predatory lenders (lenders that intentionally coerce consumers into contractual loans with unusually high payment terms and interest rates, often directed at uninformed borrowers or those with poor credit). Several bills have been introduced in the past few years, but all have failed. However, the Home Ownership and Equity Protection Act of 1994 federal law applies to Alabama and all of the United States.

Step Five

Avoid Adjustable Rate Mortgages if you can. These move the interest rate risk away from the lender and onto the borrower. In essence, if interest rates rise, so will your mortgage payment. If interest rates go down, your payment will stay the same or decrease. If there is a huge increase in interest rates, you could lose thousands.

Step Six

Several programs exist in Alabama for low-income or first-time home buyers, the disabled, senior citizens, veterans, single parents and rural home buyers, such as The American Dream Down payment Initiative(ADDI), First Step, Access Alabama, Rural Alabama Mortgage Program(RAMP), Step Up and Mortgage Credit Certificate programs.

Step Seven

Get pre-approved for a home loan. Make a folder with all the info that your lender will want for the application, including last year's tax return, paycheck stubs, and any other relevant documents your lender will want; save yourself multiple trips.

Step Eight

Find an agreeable real estate agent and start your home search.

Step Nine

Finding the right home at the right price and put an offer on the home. Then pay all legal, realtor, and closing fees.

Step Ten

Finalize the sale and move in! Payments to your lender will begin shortly.

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