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.
Get a copy of you credit report and check for any mistakes. Clear up any blemishes before applying for a loan.
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.
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.
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.
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.
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.
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.
Find an agreeable real estate agent and start your home search.
Finding the right home at the right price and put an offer on the home. Then pay all legal, realtor, and closing fees.
Finalize the sale and move in! Payments to your lender will begin shortly.