Guide to Refinance, Mortgage,
& Home Equity Loans in
Montgomery, Alabama (AL)

Montgomery, AL is amazing place to call home. With a new Hyundai plant as the primary employer of individuals in the surrounding areas, and a great local school system, homeownership in Montgomery is a great choice. Excellent options on mortgage loans in this area make Montgomery, AL both a great place to live and an easy place to become a homeowner.

Choosing a mortgage

The first step is to talk with a lender about how large of a mortgage you can comfortably afford. Your lender will talk with you about your current, financial situation in order to pre-approve you for a loan. He may want see copies of your W-2 or 1099 statements for the last two years as proof of your employment history, and in order to establish your average household income, your lender may ask to see your federal tax returns for the last two years. Additionally, your lender will want to know that you are currently employed, so it is be a good idea to be prepared with pay stubs for the last two months. Bank statements and cancelled rent or mortgage checks may also speed up the process. Expect your lender to run a credit check during your first visit.

After pre-approval, it is time to select a loan type. You probably know about fixed and adjustable rate mortgages. Fixed rate mortgages come with one interest rate. Each month, your payments will be the exact same amount. Adjustable rate mortgages, on the other hand, have one interest rate for the first years of your loan, but once you have passed your initial adjustment interval (usually one, three, or five years) your interest rate will begin to change according to market conditions and your lender’s index. This means that your payments have the possibility of going up or down. You can ask your lender about the historical performance of the index to get a better idea of what your payments may look like in the next few years. These loans are great if you want lower starting payments.

If lower starting payments sound like a good idea, but want something even lower, ask your lender about balloon loans. These come with the lowest interest rates on the market, but the difficult thing about this type of loan is that it reaches maturity in just five years, so you will need to make plans to sell or refinance your loan within that time period.

Your lender should have many other options open as well, so discuss them carefully.

Refinancing

If you have had your Montgomery, AL home for a while, you might be ready to refinance your initial mortgage. The most typical reasons that people refinance are that they would like to change loan types or terms, or they want to make use of their homes’ equity. Either way, a refinance loan replaces your initial mortgage, so you will want to review the loan types available to you before you choose to refinance.

Home equity loans

If you want to make the most of your home’s equity, but do not want to change the terms of your original loan, consider a home equity loan. This type of loan is like a second house loan. You will make two payments each month: one to your mortgage company, and one to the company who offered you the equity loan. This is a good way to cash-out your equity without changing the terms of your initial loan.

If you are interested in a Montgomery, AL refinance, mortgage, or home equity loan, take a moment to fill out the form below. One of our lenders will contact you right away to discuss your needs.

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