Compare mortgage rates in Birmingham.

Introduction to Mortgage Rates

Where Mortgage Rates Come From

Mortgage rates are a product of various economic influences, as well as the borrower’s financial standing and credit score. The bond market, particularly the 10-year U.S. Treasury Note yield, is a strong indicator of mortgage rate trends. When you hear that the yield is rising, you can bet that mortgage rates will follow — and vice versa.

Some other tipoffs: When the housing market heats up, mortgage rates may increase. Rising inflation and unemployment rates can also push them up. Being aware of these factors can help you anticipate rate changes and help secure you the best mortgage rates in Birmingham.

See how your debt level may affect your mortgage

Use SoFi’s debt-to-income calculator to determine your personal DTI number..

How Interest Rates Affect Home Affordability

Mortgage rates affect home affordability more than you might realize. Let’s say you’re anticipating needing a $400,000 loan. At a 6.50% interest rate, your monthly payment would be around $2,528. But if that rate creeps up to 7.00%, your payment jumps to $2,661. Over 30 years, you’ll enjoy nearly $48,000 in savings by securing the lower rate. So when you’re considering a home purchase in Birmingham, make sure to consider not just your monthly mortgage payment, but also your long-term costs.

The table below shows how your monthly mortgage payment and total interest paid are affected by differences in interest rate and repayment term.

Birmingham Mortgage Rate Trends

Historical U.S. Mortgage Rates

Mortgage rates have seen many ups and downs, playing a pivotal role in the ebb and flow of the housing market. The chart shows how fixed-rate mortgages have fluctuated from 1970 to present. And the table at right compares the Alabama rate to the national average from 2000 to 2018. You’ll notice that the state rate stays close to the national rate — at times a bit higher, sometimes lower. (The Federal Housing Finance agency stopped tracking city-level averages in 2018.)

Should You Wait for Interest Rates to Drop?

If you’re buying your first home in Birmingham, you might be wondering if you should put off your purchase and wait for mortgage rates to drop. Financial analysts predict that rates will likely stay steady for the time being. They’re expecting the average rate to hover around 6.30% through the end of 2025. That means mortgage rates may not be the top concern. Are home prices expected to rise? Do you need to buy because your family is growing, downsizing, or relocating? If the answer to any of these questions is yes, this might be the time to buy.

If rates do happen to decline in the future, you can always consider a mortgage refinance. That way, you can keep your options open and make the best decision for your situation.

Cost of Living in Birmingham, Alabama

The overall cost of living in Alabama is among the lowest in the nation. This is good news for homebuyers, since the cost of living has an impact on home prices and how families fit mortgage payments into their budget.

Here’s how Birmingham compares to other Alabama cities on an index where 100 equals the average cost of living in the U.S.

Recommended: The Best Affordable Places in the U.S.

How to Get Your Best Possible Rate in Birmingham

To land the most favorable mortgage rate in Birmingham, your credit score and debt-to-income (DTI) ratio are key. Elevating your credit score through sound credit management, and reducing your DTI could translate to more attractive interest rates. Boosting your down payment and considering government-backed loans, such as FHA and VA mortgages, are also smart moves. Going through the mortgage approval process with a lender and meticulously weighing the pros and cons of various loan types can further tip the scales in your favor.

Recommended: Average Monthly Expenses for One Person

Tools & Calculators

A mortgage payment calculator can help you understand the impact of different mortgage rates in Birmingham on your monthly payments. It can also show you how much interest you’ll pay over the life of the loan. This can help you make better financial decisions when it comes to buying a home.

Below are three mortgage calculators that may be useful.

Types of Mortgages Available in Birmingham

Did you know that the type of mortgage loan you choose has an impact on your interest rate? However, your credit score may guide you to specific loans. For instance, conventional mortgages typically require a credit score of 620 or higher, though the average successful applicant boasts a score of 758. FHA loans beckon to house hunters with scores as low as 500. The important thing is to find a mortgage that aligns with your overall financial goals.

How to Evaluate Loan Offers in Birmingham

A competitive mortgage rate can be a game-changer, potentially saving you tens of thousands. Every fraction of a percent counts. So compare the rates and fees from multiple lenders, including traditional banks, credit unions, and online lenders. Remember to focus on the annual percentage rate (APR), which encompasses both fees and closing costs. Once you’ve found a loan that suits you, consider locking in the rate for a fee to safeguard against potential increases. This way, you can secure a favorable deal and protect your budget.

Birmingham Mortgage Resources

Since 1980, the Alabama Housing Finance Authority has helped 90,000 families purchase a home. The Step Up program is a standout, offering up to 4% of the home’s price (capped at $10,000) as a second mortgage. With a minimum 640 credit score for those earning below 80% of the area median income, this program is within reach of many. The Affordable Income Subsidy Grant is another gem, offering 0.50% to 1% of the loan for closing costs.

And let’s not forget the Mortgage Credit Certificate, which can provide up to a $2,000 tax credit for eligible first-time homebuyers. (Generally, you can qualify as a first-time homebuyer if you haven’t owned a primary residence within the last three years.)

Closing Costs in Birmingham

If you’re planning to buy a home in Birmingham, you can expect to allocate around 2% to 5% of the loan value to cover your closing costs. These costs are influenced by various factors, such as the property’s value and location. They typically include the following:

•   Abstract and recording fees. These are related to the title search.

•   Application fee: Your lender’s charge to process a loan application.

•   Appraisal and survey fees: This is usually in the $300 to $600 range and is sometimes paid before the closing.

•   Credit reporting, underwriting, and origination fees: The lender may charge anywhere from $10 to $100 per applicant to check their credit score; underwriting fees (often in the $300 to $750 range) may also be added. Origination fees can be from 0.5% to 1% of the loan’s value.

•   Flood certification fee: If required, the certification will state the flood zone status of the property.

•   Title search and title insurance fees: The buyer typically pays for the title search that verifies there are no other claims on the property in question.

The Takeaway

The mortgage market in Birmingham, Alabama is rich with choices. By keeping your finger on the pulse of current mortgage rates and exploring down payment assistance programs, you can make the best decisions for your financial situation and homeownership goals. Whether you’re a first-time homebuyer or a seasoned homeowner, knowing the different types of mortgages and the factors that influence mortgage rates can help you secure the best loan terms and rates for your situation.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

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FAQ

Will mortgage rates drop in Birmingham, Alabama?

Predicting future mortgage rates in Birmingham with complete certainty is a challenge, as various economic factors can influence them. However, one can monitor key economic indicators and stay informed about decisions made by the Federal Reserve to gain valuable insights. That said, economists are anticipating that mortgage rates will hover around 6.30% through 2025, with only marginal movement in 2026.

Will Birmingham, Alabama home prices ever drop?

While a dip in prices is possible, it’s often a reflection of larger economic shifts. Plus, the cost of living in Alabama is already among the lowest in the country. Your best bet is to find an experienced real estate agent who can share their expertise on the local market.

How do you lock in a mortgage rate?

Locking in a mortgage rate in Birmingham, Alabama can be a smart move, bringing you peace of mind and financial stability. Once you find a competitive rate, request a rate lock from your lender. The lock typically lasts 30 to 60 days, ensuring the rate remains fixed during the loan process. Just be aware you’ll likely pay a fee.

How Do Mortgage Interest Rates Work?

Mortgage interest rates are the charges you pay for the privilege of borrowing money to buy a home, usually calculated as a percentage of the loan amount. These rates can fluctuate based on a few key factors, such as your credit score, the size of your down payment, and the type of loan you choose. Fixed-rate mortgages offer the security of a steady interest rate for the entire loan term, shielding you from potential rate hikes. On the other hand, adjustable-rate mortgages (ARMs) often start with lower rates but can change over time, which may make your payments less predictable. Understanding how these rates are determined and their impact on your monthly budget is crucial for making well-informed decisions about your home purchase.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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Compare mortgage rates in Phoenix.

Introduction to Mortgage Refinance Rates

Where Mortgage Rates Come From

Mortgage rates are the result of a complex interplay between various economic factors and your personal financial situation. Let’s look at these closely:

Discover how your debt level may impact your mortgage.

Try SoFi’s debt-to-income calculator to calculate your DTI number.

Phoenix Mortgage Rate Trends

Historical U.S. Mortgage Rates

Understanding the historical trends of mortgage rates in the Phoenix area can provide some insight into current market conditions. While rates are higher now than in 2021, when they hit historic lows, they remain well below the all-time highs seen in the 1980s. Let’s take a closer look at the past. The graphic shows more than a half-century of rates, while the chart shows how Phoenix’s average rate has compared to these national averages (it is often just below the national level).

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How to Get Your Best Possible Rate in Phoenix

To secure the best mortgage rates in Phoenix that you can get, you may want to take these steps.

•   Review your credit score, and if necessary, work to strengthen it.

•   Lower your debt-to-income (DTI) ratio by paying down as much debt as you can.

•   Increase your down payment though savings or gifts from friends and family.

•   Compare rates from different lenders so you can see the full range of rates available to you.

•   Consider going through the mortgage preapproval process. This will give you a better idea of what you can afford.

Types of Mortgages Available in Phoenix

In the sunny city of Phoenix, you have many types of mortgage loans available to you — it’s all about finding the right fit for your financial landscape. These are the most common types.

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Should You Wait for Interest Rates to Drop?

If you’re buying your first home in Phoenix, you might be pondering this question. Fannie Mae’s forecast for interest rates through the end of 2025 hovers around 6.30%. So, what does that mean for you? The decision to buy a home will depend on a variety of factors, including your budget and the current market conditions in your area. Are home prices expected to increase? If so, this might be time to buy. Did you recently relocate to the area, or is your family growing? If so, mortgage rates may not be the primary driver of your decision. (Remember, you can always undertake a mortgage refinance down the line if rates take a dip.)

The Cost of Living in Phoenix

The appeal of Phoenix is undeniable. With an average of 286 sunny days each year, it’s a city that offers a lot. No surprise, then, that its population has been on a steady uptick. Its cost of living is above average for the U.S. as a whole but looks like a bargain when compared to other popular Arizona cities. The median home sale price here is just under $400,000.

Here’s how Phoenix compares to other Arizona cities on a cost-of-living index where 100 equals the average cost of living in the U.S.

Get Your Best Possible Rate in Phoenix

To secure the best available mortgage rates in Phoenix, your task is to focus on improving your credit score and actively lowering your debt-to-income (DTI) ratio. Check your credit report and look for inaccuracies. And pay your bills on time. Avoid taking on new debts that would tip your DTI in the wrong direction. And consider making a larger down payment to the extent you are able. Seek out quotes from multiple lenders and carefully explore government-backed loan options if you are eligible. Going through the mortgage preapproval process can help you fully understand your budget and negotiate the most suitable terms with a lender in Phoenix.

Helpful Tools & Calculators

Online tools can be a huge help during the mortgage process, from aiding you in understanding your home budget to enabling you to see how different mortgage rates in Phoenix might affect your monthly costs. These are our favorite calculators:

How to Evaluate Loan Offers in Phoenix

Once you’ve secured quotes for a home loan from a variety of lenders, it’s time to compare them side by side. Don’t just look at the interest rate — be sure to look at the annual percentage rate (APR), which gives you a comprehensive view of the costs involved. Once you’ve found an offer that suits you, consider requesting to lock in the rate for up to 90 days, especially if you’re concerned about rates increasing. This can provide peace of mind in a fluctuating market.

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Phoenix Mortgage Resources

Arizona offers programs to aid homebuyers who are stepping into the market for the first time and those with limited financial means. Note that you could still qualify as a first-time homebuyer if you haven’t owned a primary residence in the past three years. Home+Plus is a down payment assistance program that offers a 30-year fixed-rate mortgage and up to 4% down payment assistance. The Pathway to Purchase Homebuyer Assistance Program offers up to $20,000 in down payment assistance, even for those who aren’t first-time buyers.

Closing Costs in Phoenix

If you’re buying a home in Phoenix, plan to set aside between 2% and 5% of your loan amount to cover closing costs. The total you’ll pay can vary based on the property’s value and location. These costs often include loan origination fees, appraisal fees, and title insurance. Remember, too, that some homebuyer assistance programs can help you pay for closing costs.

The Takeaway

By keeping an eye on the Phoenix mortgage market and exploring the various assistance programs available, you can make the right decisions to achieve your dream of homeownership. Whether you’re a first-time buyer or a seasoned homeowner, understanding the different types of mortgages and using online calculators can help you find the best fit for your needs.

View your rate

FAQ

Will mortgage rates drop in Phoenix?

While it’s a bit like gazing into a crystal ball, keeping tabs on economic indicators and maintaining open lines of communication with lenders can help you answer this question. Watch economic factors like inflation and Treasury bond prices. When rates on the 10-year U.S. Treasury Note rise, rates may be headed up as well.

Will Phoenix home prices ever drop?

The Phoenix housing landscape is influenced by many factors, including the overall state of the economy, both locally and nationally, and the balance of supply and demand. While it is difficult to predict the exact direction of home prices due to the inherent volatility of the market, a real estate agent with local knowledge may be able to help you assess where prices are headed.

Is it a good time to buy a house in Phoenix?

Deciding whether to buy a house in Phoenix depends more on your personal financial readiness than on the prevailing market conditions. Mortgage rates in Phoenix play a role in overall affordability. If you are financially ready to purchase property and you find a competitive interest rate, it could be a good time to enter the market and buy a home. However, it’s important to carefully consider your overall financial goals before making such a significant decision about homeownership.

How do mortgage interest rates function?

Mortgage interest is the fee you pay to a lender for the privilege of borrowing money, typically expressed as a percentage of the total loan. It’s a significant portion of your home expenses, especially in the early years of homeownership. The rate you secure is influenced by a variety of factors, including your financial profile, the state of the economy, and even the local inflation rate in Phoenix.