15-year fixed mortgage

For most of the last century, the standard for housing mortgages was fifteen and thirty year loans. Today there are twenty and even forty year mortgages in the market, but the thirty year mortgage is by far the most popular. The second choice is the fifteen year mortgage, for those who are willing to sacrifice in order to pay a mortgage off in half the normal time.

Interviews with homeowners who have made this choice reveal a variety of reasons for choosing the fifteen year fixed mortgage. The general profile, however, is a couple with two incomes who are willing to put virtually all their extra income beyond the required monthly bills. The usual reasoning is that they have chosen to get through the home acquisition process as quickly as possible, so that fifteen years hence they will be able to do other things. Young couples see the time fifteen years off that they will be putting kids through college. Some career couples want to retire early and see a fifteen year fixed mortgage as a sound investment.

In all cases, taking on a fifteen year mortgage is going to require a good deal of discipline combined with an uninterrupted cash flow. The difference between a fifteen and a thirty year fixed mortgage is not, however, as great as one might think. It certainly isn’t twice the payment, as simple arithmetic might dictate. The additional comparative cost depends on the loan you get and the tax bracket that you are in.

A fifteen year fixed mortgage will usually carry an interest rate that is .35 to .40 of one percent lower than a thirty year fixed rate loan. Doing the math on a model comparison for a $300,000 mortgage shows a payment at 7% interest for thirty years would be $1995.91. The payment on the same mortgage for fifteen years at 6.65% interest would be $2638.12. The mortgage payment for the fifteen year loan is 32% higher than the payment on the thirty year loan – a loan that takes twice as long to pay off.

To be sure, getting into a loan like this isn’t easy. You have to have good credit and a household income that is healthy enough to pass the test for total monthly debt. That will probably mean that your other monthly obligations need to be minimal. Unless someone in the household buys the right lotto ticket, you probably won’t be driving expensive cars for a while.

People who choose the wider perspective are perhaps more willing to make the sacrifice. The difference in interest between the two loans characterized above is a little over $243,000. That’s an enormous savings, accomplished by fifteen years of frugal living. It’s a difficult, but rewarding choice to consider.…

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Guide to Alabama Mortgages

Maybe you are buying your first home in Alabama, or perhaps you’re relocating to Alabama from another state. Then again, you may be a long-time Alabama resident who is looking to either refinance your current mortgage or take out a home equity loan for home improvements. Regardless of your situation, it’s important that you educate yourself on Alabama home loans before shopping for a home and/or mortgage. This article explains what you will need to know before seeking a home loan in Alabama:

The median price of a home in Alabama is $211,500. Recently, homes in Alabama have been appreciating at rates well above the national average. As a result, income levels in many parts of Alabama are too low to purchase a median-priced home with a conventional loan. Although average interest rates in Alabama are below the national average, Alabama has one of the lowest levels of home affordability in the nation.

In Alabama, before a buyer submits an offer on a home, their real estate agent is required to present them with a completed Real Estate Transfer Disclosure Statement. This document, completed by the seller of the property, requires the seller to name all of the property that will be included in the purchase (refrigerator, stove, alarm system, etc.) and rate certain aspects of the conditions of both the included property and of the house itself. This document requires the seller to disclose any potential problems or hazards that may discourage the buyer from putting an offer in on the home.

Alabama’s Civil Code Provision of the Real Estate Act regulates the issuance of variable interest rates for the purchase of real estate. Therefore, borrowers who are issued large mortgage amounts are guaranteed a fixed rate mortgage. Alabama law also prohibits the charging of interest more than one day prior to the recording of the mortgage even if the borrower received the loan prior to that time.

In October of 2020, Alabama law enacted a set of anti-predatory lending laws in order to help protect Alabama homebuyers from predatory lenders. Some of the provisions of this new set of laws include the prohibition of a lender charging points and fees in excess of 6% of the total principal financed amount, the prohibition of a mortgage company issuing a loan to a borrower in an amount that the borrower could not reasonably afford to repay, and the prohibition of the financing of single-premium credit insurance, among others.

If you’re buying a home in the state of Alabama, you qualify for both federal and state FHA, USDA, and VA loans. First-time home buyers qualify for Alabama FHA loans with below-market interest rates, and, depending on their eligibility, may also qualify for a loan in order to cover down payment and/or closing costs. Teachers and other professionals who work in an educational capacity may qualify for Alabama’s Extra Credit Teacher Home Purchase Program, a down payment assistance loan with forgivable interest.

In addition to FHA loans, the state of Alabama also offers comparable programs to persons with disabilities or persons who live with and care for persons with disabilities. The state also offers several unconventional loans designed to aid homebuyers with the costs of their monthly mortgage payment. For example, Alabama’s Interest Only PLUS loan provides qualified homebuyers with a 100% financing 35-year loan that only requires payments toward the accrued interest on the mortgage for the first five years of the loan — borrowers do not have to pay toward the principal amount borrowed until after the first five years. The individual requirements of each of these loans vary depending on the county in which you are buying a house. Specific requirements can be obtained through the Alabama Housing Finance Agency.…

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