Mortgage Calculator in Alabama

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Updated: October 21, 2024

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Sumter County has the lowest median monthly mortgage payment in Alabama at $560, contrasting with Shelby County's highest at $2,220. Your monthly mortgage payments can significantly influence your immediate budget and long-term financial health, shaping your ability to save and invest for the future.

Use MoneyGeek's mortgage calculator in Alabama to estimate your monthly mortgage payment, assess suitable loan terms for your budget and understand the total interest paid over the life of the loan. Input your purchase details into the calculator to see your financial commitment.

Mortgage Calculator

Simply estimate your Alabama loan payments, taxes and PMI.

Updated: Sep 4, 2024

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Optional: add taxes, insurance, HOA Fees

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Get personalized mortgage rates from Alabama.

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Key Takeaways

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In Alabama, Sumter County has the lowest median monthly mortgage payment at $560, while Shelby County has the highest at $2,220.

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Using a mortgage calculator can help you find a monthly mortgage payment that fits your budget, adjust loan terms or down payments and estimate your total interest over the loan's life.

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The average APR for a 30-year mortgage in Alabama is 5.9%, and for a 15-year mortgage, it is 5.5%.

MoneyGeek uses publicly available data from Zillow for the rates on this page. Mortgage rates shift daily, and we take a snapshot to analyze rate information for Alabama. We update the data frequently to ensure you have access to the most recent rates, but the values may differ slightly between reporting sources. Unless otherwise stated, all rates are annual percentage rates (APRs).

See the sources cited for more details about data related to median mortgage payments, home prices, down payments and local tax rates.

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Interest rate data was last updated in September 2024.

How to Use Our Alabama Mortgage Calculator

MoneyGeek's mortgage calculator in Alabama can calculate your monthly mortgage payments, determine your mortgage's affordability and provide insights into your amortization schedule. This tool helps you make informed decisions about your home purchase.

Calculate Your Monthly Mortgage Payment

Understanding your monthly mortgage payment involves several variables, including the home's sale price and your down payment. Explore how the Alabama mortgage calculator can provide you with a personalized payment breakdown.

1
Home Price

The home price directly influences your monthly mortgage payment in Alabama. A lower home price in Sumter County, at a median of $95,410, means lower monthly payments than in Shelby County, where the median is $379,720, according to the National Association of Realtors.

2
Down Payment

The size of your down payment influences your monthly mortgage payment by reducing the loan amount. Alabama's median down payment is $54,950, according to ATTOM.

3
Annual Percentage Rate

Your annual percentage rate (APR) impacts your monthly mortgage payment, with a lower APR resulting in lower payments. The current mortgage rates in Alabama change over time and vary between loan types. For example, the average APR for a 15-year fixed mortgage is 5.5%, and for a 30-year fixed mortgage, it's 5.9%.

4
Loan Terms

Shorter terms, like 15 years, often have higher monthly payments but result in less interest paid over the life of the loan. Conversely, a 30-year term typically has lower monthly payments but accrues more interest over time. Choosing the right term depends on your financial situation and goals.

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SAMPLE MONTHLY PAYMENT CALCULATION IN ALABAMA

Using the mortgage calculator in Alabama, you can see that the monthly payment for a 30-year fixed-rate mortgage on a house costing $275,000 after a 20% down payment is $1,305. This figure excludes additional costs like HOA fees and property tax.

When you switch to a 15-year repayment term, your monthly mortgage payment in Alabama climbs to $1,798. This change will increase your short-term expenses but can reduce your total interest paid on the home loan by $146,199 over the life of the loan.

Determine Your Mortgage's Affordability

Buying a home is one of the most significant expenses you'll have, and your mortgage payments will take a substantial portion of your monthly income. Understanding how affordable your mortgage is affects your overall finances. MoneyGeek's mortgage calculator can help you determine this by inputting your monthly income and other monthly debts, such as car loans and student loans.

The calculator also shows your debt-to-income ratio, a critical metric for borrowers. This ratio helps you understand how much of your income goes toward debt payments, which is essential when planning to secure a mortgage. According to Experian, the average debt in Alabama is $77,981, which translates to an average monthly debt of $6,498.

See Your Amortization Schedule

Mortgage amortization is the process of paying off a loan over time through regular payments. The key terms are:

  • Principal: The loan amount you borrow. Understanding this helps you see how much you owe.
  • Interest: The cost of borrowing the principal. Knowing this shows the total cost of your loan.

MoneyGeek's mortgage calculator allows you to see your amortization schedule and estimate the total interest you'll pay over the life of your loan in Alabama. You can also see when your monthly payments begin to go more toward your principal vs. your interest, which helps you understand your payment allocation over time.

Additional Mortgage Fees in Alabama

Homebuyers in Alabama must consider additional mortgage fees that could impact your budget. For example, mortgage insurance and HOA fees can increase your monthly payment. Property taxes and homeowners insurance are other costs to keep in mind.

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    Homeowners Insurance

    Homeowners insurance protects your property and personal belongings from damage or theft. It also provides liability coverage if someone is injured on your property. The average homeowners insurance in Alabama is $4,123 per year.

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    Property Tax

    Property tax is a levy on real estate that homeowners must pay to the local government. It funds public services like schools and infrastructure. According to the Tax Foundation, Alabama's effective property tax rate is 0.40%, ranking it 49th in the nation.

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    HOA Fees

    HOA fees are payments to homeowners associations for property management, maintenance and community amenities. These fees are typically paid monthly or annually.

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    Private Mortgage Insurance

    Private mortgage insurance (PMI) protects lenders if a borrower defaults on a loan. It applies to conventional mortgages when the down payment is less than 20%. Borrowers must request cancellation once they reach 20% equity, or it will only be automatically removed at 22%.

How Much Is Private Mortgage Insurance in Alabama?

The average APR for a 30-year fixed loan in Alabama is 5.9%. For a 15-year fixed loan, it's 5.5%. Using MoneyGeek's PMI calculator, you can see that for a $275,000 home with a 10% down payment, borrowers with a credit score between 680 and 719 pay PMI worth $117 per month if they get a 30-year fixed-rate loan. The amount becomes $115 if they opt for a 15-year loan instead.

MoneyGeek's Alabama mortgage calculator allows you to see your amortization schedule and determine when you can stop paying for PMI:

1
Calculate your monthly mortgage payment

Input the necessary information, such as the home's price, down payment and mortgage rate in Alabama. If you already know some fees you need to cover, such as property tax or HOAs, include these. If not, leave them blank, but know you'll still have to pay for these. Run the calculator and get your total monthly payment.

2
Calculate for your target equity

You can request that PMI be canceled when you've accumulated at least 20% equity in your home — this will be your target equity. To calculate your target equity, multiply your home's price by 20%.

3
Determine the remaining equity required

Your down payment already contributes towards the 20% equity you need to request your PMI's cancellation. Deduct your down payment from your target equity to get the remaining amount.

4
Establish a timeline

Go to the Amortization tab of the mortgage calculator. Move the slider until the principal paid exceeds your remaining equity required — that's the year you can stop paying for PMI.

Private Mortgage Insurance Calculator

Calculate your monthly private mortgage insurance (PMI) premium based on your credit score and down payment.

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WHEN CAN YOU CANCEL YOUR PMI?

Let's say you put in an 8% down payment for a home in Alabama priced at $350,000. With an average APR of 5.9% for a 30-year fixed-rate loan, your monthly mortgage payment is $1,910. You need 20% equity to cancel PMI, equivalent to $70,000.

Since your down payment was $28,000, you still need to pay $42,000 to accumulate 20% equity. Assuming that your home's value remains the same over the years and that you consistently pay your mortgage, you can request your lender to cancel your PMI before the end of the ninth year.

How to Lower Your Monthly Mortgage Payment in Alabama

Your mortgage is probably the biggest expense you have each month. For a $225,000 loan in Alabama at 5.9% interest, you'll pay $1,305 monthly. However, if you can reduce your APR by 0.25%, your new monthly mortgage payment becomes $1,270. That $35 difference in monthly payment adds up — over a 30-year fixed-rate mortgage, you'll save $12,593 in total interest.

This example highlights the value of finding ways to lower monthly mortgage payments. Here are some strategies to consider:

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    Improve your credit score

    Your credit score affects your mortgage payment. In Alabama, if you put in a down payment between 5% to 20% of the home's sale price, the average APR for a 30-year fixed-rate mortgage is 6.6% if your credit score is above 740. However, if your credit score is under 680, the average APR becomes 7.2%. This change in APR makes your monthly mortgage payments go from $1,405 to $1,493.

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    Save for a bigger down payment

    Putting a bigger down payment may result in lower monthly mortgage payments. For a $225,000 loan in Alabama, putting 8% down makes your APR 6.7%, resulting in a monthly mortgage of $1,633. Increasing your down payment to 25% puts your APR at 6.3% and a monthly mortgage of $1,277.

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    Choose a longer loan term

    A longer loan term affects your monthly mortgage payment. A 15-year fixed-rate mortgage in Alabama has an APR of 5.5%. A 20% down payment makes your monthly mortgage payment $1,798. Compare this to $1,305, which you'll have to pay each month if you change loan terms to 30 years, even if your APR increases to 5.9%.

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    Explore homeownership assistance programs

    You can find homeownership assistance programs in Alabama that may help with your mortgage costs. Institutions like the Alabama Housing Finance Authority offer various forms of assistance to eligible homeowners.

FAQ: Mortgage Calculations in Alabama

Using a mortgage calculator can raise questions for potential borrowers, especially in Alabama's housing market. We've addressed commonly asked questions to help you understand your mortgage options.

How much mortgage can I afford in Alabama?
What is the average mortgage debt in Alabama?
How much down payment do I need to purchase a house in Alabama?
Do you really need private mortgage insurance in Alabama?
What's the effective tax rate in Alabama?
What is the median home price in Alabama?

About Zachary Romeo, CBCA

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Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.

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