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Home Mortgage Rates in Alabama

Downtown Huntsville.

Alabama is one of the fastest growing states in the country. As a result, Alabama's home loan industry is starting to see an upward trend in home loan applications. This should help an industry that features the normal selection of home loan products.

These home loan products are protected by a number of foreclosure procedures that generally benefit the lender. However, borrowers still have many privileges that are rarely seen elsewhere in the country. As a result, anyone who is interested in purchasing a foreclosed home in Alabama should learn how the foreclosure process works in Alabama.

Alabama Real Estate Trends

Here is some background information about Alabama's median home values, population trends and mortgage industry that can help readers learn more about the foreclosure process in Alabama.

Alabama's median home values tend to be significantly lower than the February 2010 national median home price of $190,000. To see why this is true, here are the February 2010 median home values for single-family homes in three of Alabama's well-known cities:

  1. Mobile ($154,900)
  2. Birmingham ($149,000)
  3. Montgomery ($139,900)

There are two reasons why Alabama's median home values tend to be much lower than the national median home price:

  1. There is heavy price competition that is forcing home values down. This is the case because higher than average home inventories are forcing sellers to lower their prices on their properties. This is especially true for prices that sell for $150,000-$200,000.
  2. Furthermore, Alabama's low per capita income has also depressed home values. Alabama's per capita personal income has hovered around $26,000 for the past several years. This has kept pace with the 2006 national mean per capita income of $26,036. However, this lower per capita income has depressed home values because it has forced home buyers in Alabama to be more price- conscious. As a result, one can reasonably surmise that this increase in the income elasticity of demand for homes has driven down home values in Alabama.

Places to Live

Metropolitan Areas

AL Rank US Rank Metropolitan Area 2016 Pop 2010 Pop Change % △
1 49 Birmingham-Hoover 1,147,417 1,128,047 19,370 1.72%
2 117 Huntsville 449,720 417,593 32,127 7.69%
3 128 Mobile 414,836 412,992 1,844 0.45%
4 142 Montgomery 373,922 374,536 -614 -0.16%
5 161 Columbus, GA-AL Metro Area 308,755 294,865 13,890 4.71%
6 190 Tuscaloosa 241,378 230,162 11,216 4.87%
7 213 Daphne-Fairhope-Foley 208,563 182,265 26,298 14.43%
8 262 Auburn-Opelika 158,991 140,247 18,744 13.36%
9 271 Decatur 152,256 153,829 -1,573 -1.02%
10 287 Dothan 147,834 145,639 2,195 1.51%
11 289 Florence-Muscle Shoals 146,534 147,137 -603 -0.41%
12 351 Anniston-Oxford-Jacksonville 114,611 118,572 -3,961 -3.34%
13 377 Gadsden 102,564 104,430 -1,866 -1.79%
14 401 Albertville 95,157 93,019 2,138 2.30%
15 411 Talladega-Sylacauga 90,684 93,830 -3,146 -3.35%
16 436 Cullman 82,471 80,406 2,065 2.57%
17 477 Fort Payne 70,900 71,109 -209 -0.29%
18 577 Scottsboro 52,138 53,227 -1,089 -2.05%
19 586 Enterprise 51,226 49,948 1,278 2.56%
20 598 Ozark 49,226 50,251 -1,025 -2.04%
21 684 Alexander City 40,727 41,616 -889 -2.14%
22 698 Selma 40,008 43,820 -3,812 -8.70%
23 728 Atmore 37,728 38,319 -591 -1.54%
24 777 Valley 33,843 34,215 -372 -1.09%
25 784 Troy 33,286 32,899 387 1.18%
26 830 Eufaula, AL-GA Micro Area 28,300 29,970 -1,670 -5.57%

Popular Alabama Cities

Birmingham-Hoover (1,117,608):

Birmingham, Alabama Skyline.

Birmingham has seen an increase in its per capita income. This is the case because the publishing, biotech and health care industries have made huge investments in the area. Furthermore, residents also enjoy a lower cost of living and lower taxes.

Mobile (404,406):

Mobile, Alabama Skyline.

Mobile's economy is diverse. It features many employers who conduct business in the aerospace, retail, construction, manufacturing and shipping industries. However, Mobile also has one of the highest poverty rates in the nation at 17.6%. This statistic has kept home values down and Mobile very vulnerable to foreclosures. (Source: http://factfinder.census.gov/.)

Montgomery (201,998):

Montgomery, Alabama Skyline.

As the state capital, Montgomery maintains a diversified economy that is heavily reliant upon government spending. Furthermore, the military’s presence at Maxwell-Gunter Air force Base and university-level research projects give the city one of the highest per capita incomes in the state.

Fastest Growing Cities

Alabaster (25,000)

Alabaster is a suburb of Birmingham. It has seen amazing growth over the last decade because it enjoys one of the lowest tax rates in the nation. Furthermore, its great quality of life and wide open spaces has become just the thing for Birmingham residents who want to take live in a more relaxed setting. (Source: http://cityofalabaster.com/Default.asp?ID=99.)

Pelham (20,625)

Pelham has grown steadily over the past five years because it has developed its travel and tourism industry that takes advantage of its open spaces and proximity to famous golf courses. Furthermore, Pelham has also seen many retirees flock to the area. This true because the city enjoys a very low crime rate, clean air and a very low cost of living. (Source: http://www.pelhamonline.com/Default.asp?ID=176.)

Mobile (406,309)

Mobile's manufacturing and shipping industries have seen new life as foreign investors have flocked to take advantage of the area's port and shipping lanes. This has attracted many new residents to the area who wish to take advantage of the new job opportunities that have opened up as a result.

Alabama Census Data

According to the United States census an estimated 4,863,300 people live in the state of Alabama. The state has 50,645.33 mi² of land area, which gave it a population density of 96.03 per mi². Here is a list of cities with more than 5,000 residents, with their estimated population as of June 2016 & the 2010 United States Census. For Census Designated Places (CDP) where there was no population estimate available for 2016, the 2011-2015 American Community Survey 5-Year Estimates data was used.

All table columns are sortable. Click on the column headers to sort by that column. Click again to sort low to high. Cities with higher levels of population growth typically see the increased demand drive faster real estate price appreciation.

Rank Geography County 2016 Pop 2010 Pop Change % △ Land mi² Pop Den mi²
1 Birmingham Jefferson & Shelby 212,157 212,237 -80 -0.04% 146.07 1,452.43
2 Montgomery Montgomery 200,022 205,764 -5,742 -2.79% 159.57 1,253.51
3 Huntsville Madison & Limestone 193,079 180,105 12,974 7.20% 209.05 923.60
4 Mobile Mobile 192,904 195,111 -2,207 -1.13% 139.11 1,386.70
5 Tuscaloosa Tuscaloosa 99,543 90,468 9,075 10.03% 60.23 1,652.71
6 Hoover Jefferson & Shelby 84,978 81,619 3,359 4.12% 47.16 1,801.91
7 Dothan Houston, Dale & Henry 68,468 65,496 2,972 4.54% 89.4 765.86
8 Auburn Lee 63,118 53,380 9,738 18.24% 58.07 1,086.93
9 Decatur Morgan & Limestone 55,072 55,683 -611 -1.10% 53.67 1,026.12
10 Madison Madison & Limestone 47,959 42,938 5,021 11.69% 29.59 1,620.78
11 Florence Lauderdale 39,959 39,319 640 1.63% 26 1,536.88
12 Phenix City Russell & Lee 37,132 32,822 4,310 13.13% 27.75 1,338.09
13 Gadsden Etowah 35,837 36,856 -1,019 -2.76% 37.16 964.40
14 Prattville Autauga & Elmore 35,606 33,960 1,646 4.85% 32.85 1,083.90
15 Vestavia Hills Jefferson & Shelby 34,688 34,033 655 1.92% 19.41 1,787.12
16 Alabaster Shelby 32,948 30,352 2,596 8.55% 25.04 1,315.81
17 Opelika Lee 29,869 26,477 3,392 12.81% 59.59 501.24
18 Enterprise Coffee & Dale 28,024 26,562 1,462 5.50% 31.24 897.06
19 Bessemer Jefferson 26,511 27,456 -945 -3.44% 39.85 665.27
20 Daphne Baldwin 25,913 21,570 4,343 20.13% 16.24 1,595.63
21 Homewood Jefferson 25,613 25,167 446 1.77% 8.36 3,063.76
22 Athens Limestone 25,393 21,897 3,496 15.97% 39.54 642.21
23 Northport Tuscaloosa 25,045 23,330 1,715 7.35% 16.75 1,495.22
24 Pelham Shelby 23,050 21,352 1,698 7.95% 39.02 590.72
25 Prichard Mobile 22,185 22,659 -474 -2.09% 25.29 877.22
26 Anniston Calhoun 22,112 23,106 -994 -4.30% 45.64 484.49
27 Albertville Marshall 21,525 21,160 365 1.72% 26.56 810.43
28 Trussville Jefferson & St. Clair 21,422 19,933 1,489 7.47% 33.03 648.56
29 Oxford Calhoun & Talladega 21,120 21,348 -228 -1.07% 30.67 688.62
30 Mountain Brook Jefferson 20,590 20,413 177 0.87% 12.79 1,609.85
31 Fairhope Baldwin 19,421 15,326 4,095 26.72% 12.06 1,610.36
32 Troy Pike 19,191 18,033 1,158 6.42% 27.63 694.57
Tillmans Corner CDP Mobile 19,065 17,398 1,667 9.58% 12.97 1,469.93
33 Selma Dallas 18,983 20,756 -1,773 -8.54% 13.81 1,374.58
34 Helena Shelby & Jefferson 18,673 16,793 1,880 11.20% 20.34 918.04
35 Foley Baldwin 17,607 14,618 2,989 20.45% 25.76 683.50
36 Center Point Jefferson 16,496 16,921 -425 -2.51% 6.12 2,695.42
37 Hueytown Jefferson 15,561 16,105 -544 -3.38% 19.45 800.05
38 Cullman Cullman 15,496 14,775 721 4.88% 19.38 799.59
39 Talladega Talladega 15,451 15,676 -225 -1.44% 23.98 644.33
40 Millbrook Elmore & Autauga 15,413 14,640 773 5.28% 12.81 1,203.20
41 Alexander City Tallapoosa 14,773 14,875 -102 -0.69% 40.84 361.73
42 Scottsboro Jackson 14,677 14,770 -93 -0.63% 50.65 289.77
43 Ozark Dale 14,610 14,907 -297 -1.99% 34.09 428.57
44 Hartselle Morgan 14,471 14,255 216 1.52% 16.26 889.98
45 Fort Payne DeKalb 14,099 14,012 87 0.62% 55.49 254.08
46 Jasper Walker 14,003 14,352 -349 -2.43% 28.46 492.02
47 Saraland Mobile 13,942 13,405 537 4.01% 23.18 601.47
48 Muscle Shoals Colbert 13,831 13,146 685 5.21% 15.53 890.60
49 Pell City St. Clair 13,794 12,695 1,099 8.66% 24.75 557.33
50 Gardendale Jefferson 13,783 13,893 -110 -0.79% 22.55 611.22
51 Calera Shelby & Chilton 13,489 11,620 1,869 16.08% 24.09 559.94
52 Moody St. Clair 12,823 11,726 1,097 9.36% 24.4 525.53
53 Jacksonville Calhoun 12,657 12,548 109 0.87% 9.84 1,286.28
54 Sylacauga Talladega 12,540 12,749 -209 -1.64% 19.49 643.41
55 Eufaula Barbour 12,404 13,137 -733 -5.58% 59.39 208.86
56 Irondale Jefferson 12,359 12,349 10 0.08% 17.31 713.98
57 Chelsea Shelby 12,341 10,183 2,158 21.19% 21.34 578.30
58 Leeds Jefferson, St. Clair & Shelby 11,940 11,773 167 1.42% 22.86 522.31
59 Gulf Shores Baldwin 11,689 9,741 1,948 20.00% 23.16 504.71
Saks CDP Calhoun 10,826 10,744 82 0.76% 12.15 891.03
60 Fairfield Jefferson 10,807 11,117 -310 -2.79% 3.47 3,114.41
61 Pleasant Grove Jefferson 10,177 10,110 67 0.66% 9.89 1,029.02
62 Atmore Escambia 10,022 10,194 -172 -1.69% 21.85 458.67
63 Russellville Franklin 9,815 9,830 -15 -0.15% 13.4 732.46
Forestdale CDP Jefferson 9,716 10,162 -446 -4.39% 6.86 1,416.33
64 Boaz Marshall & Etowah 9,710 9,551 159 1.66% 14.55 667.35
65 Clay Jefferson 9,587 9,708 -121 -1.25% 9.93 965.46
66 Rainbow City Etowah 9,531 9,602 -71 -0.74% 25.46 374.35
67 Valley Chambers 9,377 9,524 -147 -1.54% 11.03 850.14
68 Bay Minette Baldwin 9,312 8,044 1,268 15.76% 8.57 1,086.58
69 Fultondale Jefferson 9,084 8,380 704 8.40% 12.2 744.59
70 Sheffield Colbert 9,025 9,039 -14 -0.15% 6.37 1,416.80
71 Andalusia Covington 8,968 9,015 -47 -0.52% 19.66 456.15
72 Clanton Chilton 8,846 8,619 227 2.63% 21.94 403.19
73 Pike Road Montgomery 8,777 5,406 3,371 62.36% 31.64 277.40
Meadowbrook CDP Shelby 8,752 8,769 -17 -0.19% 4.22 2,073.93
74 Tuskegee Macon 8,722 9,865 -1,143 -11.59% 16.09 542.08
75 Southside Etowah & Calhoun 8,600 8,412 188 2.23% 18.98 453.11
76 Guntersville Marshall 8,437 8,197 240 2.93% 25.39 332.30
77 Tuscumbia Colbert 8,434 8,423 11 0.13% 8.75 963.89
78 Arab Marshall & Cullman 8,340 8,050 290 3.60% 12.98 642.53
79 Spanish Fort Baldwin 8,327 6,798 1,529 22.49% 28.7 290.14
80 Wetumpka Elmore 8,219 6,528 1,691 25.90% 10.11 812.96
81 Greenville Butler 7,781 8,135 -354 -4.35% 21.36 364.28
82 Pinson Jefferson 7,426 7,163 263 3.67% 10.1 735.25
Brook Highland CDP Shelby 7,032 6,746 286 4.24% 2.83 2,484.81
83 Demopolis Marengo 7,019 7,483 -464 -6.20% 17.74 395.66
84 Hamilton Marion 6,739 6,885 -146 -2.12% 38.06 177.06
85 Montevallo Shelby 6,723 6,323 400 6.33% 12.59 534.00
86 Oneonta Blount 6,699 6,567 132 2.01% 15.17 441.60
Moores Mill CDP Madison 6,591 5,682 909 16.00% 13.6 484.63
87 Opp Covington 6,586 6,659 -73 -1.10% 23.66 278.36
88 Lincoln Talladega 6,491 6,266 225 3.59% 25.1 258.61
89 Lanett Chambers 6,393 6,468 -75 -1.16% 6.22 1,027.81
Meridianville CDP Madison 6,270 6,021 249 4.14% 15.54 403.47
90 Tarrant Jefferson 6,268 6,397 -129 -2.02% 6.36 985.53
91 Satsuma Mobile 6,193 6,168 25 0.41% 7.52 823.54
92 Monroeville Monroe 6,072 6,519 -447 -6.86% 13.37 454.15
93 Robertsdale Baldwin 5,990 5,276 714 13.53% 5.45 1,099.08
94 Roanoke Randolph 5,984 6,074 -90 -1.48% 18.73 319.49
95 Orange Beach Baldwin 5,981 5,441 540 9.92% 14.7 406.87
Theodore CDP Mobile 5,942 6,130 -188 -3.07% 7.99 743.68
96 Chickasaw Mobile 5,908 6,106 -198 -3.24% 4.21 1,403.33
97 Attalla Etowah 5,865 6,048 -183 -3.03% 6.98 840.26
98 Brewton Escambia 5,432 5,408 24 0.44% 11.2 485.00
99 Smiths Station Lee 5,341 4,926 415 8.42% 6.59 810.47
Harvest CDP Madison 5,226 5,281 -55 -1.04% 12.33 423.84
100 Midfield Jefferson 5,171 5,365 -194 -3.62% 2.65 1,951.32
Grayson Valley CDP Jefferson 5,160 5,736 -576 -10.04% 2 2,580.00
101 Glencoe Etowah & Calhoun 5,135 5,160 -25 -0.48% 16.93 303.31
102 Daleville Dale 5,101 5,295 -194 -3.66% 14.09 362.03
103 Rainsville DeKalb 5,015 4,948 67 1.35% 20.56 243.92
104 Childersburg Talladega 4,997 5,175 -178 -3.44% 12.35 404.62

Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016
Source: U.S. Census Bureau, Population Division
Release Date: May 2017.

Alabama Mortgage Types

Alabama offers the usual range of home loan products, including:

  1. Fixed rate mortgages that mature in 15, 20 or 30 years
  2. ARM's that mature in 1, 3 or 5 years
  3. Refinance loans
  4. Second mortgages
  5. FHA and VA fixed rate loans
  6. Jumbo loans.

These loan products are recognized as being either mortgages or deeds of trust. However, for practical purposes, one can interchange the name of the loan product without having to worry about its legal ramifications. In addition, most modern mortgages have a Power of Sale clause that makes foreclosing on a property easier. Furthermore, most mortgages in Alabama have full recourse privileges.

However, borrowers who have defaulted on their mortgages have up to one year to attempt to redeem their homes. This potentially lengthy redemption period makes obtaining a deficiency judgment difficult. It also makes the foreclosure process somewhat more difficult to execute in Alabama.

Natural Disasters

Earthquakes

Most of Alabama has a very low earthquake risk, while Birmingham and the northeastern edge of the state near Huntsville has a low earthquake risk. Here are counties which have a low risk: Cherokee, De Kalb, Jackson & Jefferson.

Standard rental and homeowner insurance policies typically do not cover earthquake damage, though they usually cover losses caused by fires which resulted from an earthquake. You can supplement your homeowner's insurance with an earthquake policy.

Flood Insurance

Most of Alabama has a very low risk of flooding. Here are counties with higher risk levels.

  • Low flooding risk: Barbour, Bibb, Butler, Chilton, Clarke, Clay, Coosa, Fayette, Franklin, Geneva, Houston, Lauderdale, Lowndes, Marshall, Perry, Russell, Shelby, Walker, Wilcox
  • Moderate flooding risk: Autauga, Bullock, Calhoun, Chambers, Choctaw, Coffee, Elmore, Greene, Hale, Henry, Jackson, Jefferson, Lamar, Lawrence, Macon, Madison, Marengo, Mobile, Montgomery, Morgan, Saint Clair, Talladega, Tuscaloosa, Washington
  • High flooding risk: Dallas
  • Very high flooding risk: Baldwin
  • Hurricane storm surges: Mobile county has a moderate risk of hurricane storm surges while Baldwin county has a very high risk of hurricane storm surges.

Homeowner's insurance policies typically do not cover flooding.

Home buyers with mortgages in high-risk areas are required to buy flood insurance. Most flood insurance policies are sold by the United States federal government through The National Flood Insurance Program. Under-priced flood insurance in high-risk areas act as a subsidy to wealthy homeowners.

The NFIP does not charge nearly enough to cover the expected costs of its liabilities. The assessments are not sufficient to build any buffer to cover an extraordinary year, such as what occurred with Hurricane Katrina in 2005 or Hurricane Sandy in 2012. Because homeowners don€™t incur the full cost of building in a flood zone we end up with more houses there than if homeowners incurred the full cost of the flood risk, which exacerbates the government€™s costs in the next disaster.

Typically, homes built after 2002, when building code regulations tightened, are subject to lower insurance rates than older homes. On the other hand, homes without hurricane straps, with roofs that do not meet current standards for wind, with older plumbing or with outdated electrical systems may be difficult €“ or very expensive €“ to insure.

Homeowners who live in lower risk areas & are not required to purchase flood insurance heavily cross-subsidize homeowners who are in areas where floods are more common.

Tornadoes

Much of the state is considered to have a moderate tornado risk, with the norther part of the state having a very high tornado risk. A basic homeowners policy should cover financial damages from tornadoes.

Hail

Hail damage is not uncommon across the state. Damage from hail is typically covered by home insurance policies.

Alabama's Foreclosure Processes

Alabama recognizes both judicial and non-judicial foreclosure processes. However, as a general rule, most foreclosures in Alabama use non-judicial foreclosure procedures. This is the case because most modern mortgage instruments issued in Alabama contain a Power of Sale clause that makes it easier to foreclose on a defaulted property.

Here is a brief overview of how each procedure works in Alabama:

Here is how the judicial foreclosure procedure works in Alabama:

The judicial foreclosure procedure works in Alabama only if there is no verifiable "Power of Sale" clause in the original loan provisions. If this is the case, here are the steps that the lender must go through to use the judicial foreclosure procedure:

  1. First, the lender must go to the county where the home resides to obtain a formal right to foreclose.
  2. If the judge agrees that the borrower is unable to make good on the mortgage, the judge will allow the lender to begin the foreclosure proceedings.
  3. The foreclosure proceedings start by having the lender record a "lis pendens" document at the county clerk's office. This document declares to the public that the property is being foreclosed upon.
  4. Once this document is recorded, the borrower could receive a written notice within 10-30 days that his property is about to be foreclosed upon. Since this is not required by state law, some lenders skip this step.
  5. Once the lis pendens document has been officially certified in the county clerk's office, the sale may be conducted in much the same manner as if were foreclosed in a non-judicial procedure.
  6. However, if the borrower contests the sale, the court may give the borrower up until the day of the sale to redeem the property unless the original terms of the mortgage clearly state that no such period be granted to the borrower.
  7. In order to redeem the property, the borrower must pay the full amount of the loan plus any interest and costs that were associated with putting the home up for sale.
  8. Once the redemption period ends, the property is then sold in much the same manner as if it were being sold during a non-judicial foreclosure.
  9. Furthermore, the lender may opt out of the judicial foreclosure process at any time after obtaining final permission from the court by simply selling the home as if the lender were going through the non-judicial foreclosure procedure.
  10. Here is how that process works:
    • The lender must first publish a formal notice of the sale in a newspaper that is published in the county where the home is located.
    • The notice must be published at least once for at least 4 consecutive weeks.
    • The notice must provide:
      1. The time and place of the sale.
      2. A valid description of the property.
      3. And the reason why the home is up for sale.
    • Once this condition has been met, the sale takes place at the county courthouse with the county sheriff leading the proceedings.
    • The sale usually takes place from 11 AM to 4 PM.
    • A bidder may bid as low as $1.00 on the property.
    • There is no reserve price. As a result, the highest bidder wins the right to purchase the home for whatever amount of the final bid.
    • Furthermore, Alabama state law does not restrict who can bid at these sales. As a result, the borrower and the lender could technically bid at the sale.
    • The winner of the auction receives the property upon receipt of cash or a cash equivalent.
    • If the borrower is not the winner of the auction, he has one year to redeem the property.
    • During this time, the lender may sue the borrower for a deficiency judgment if the final auction price is less than what is owed on the note.

Here is how the non-judicial foreclosure procedure works in Alabama:

  1. First, the lender must go to the county court to see if there is valid Power of Sale clause in the loan's original language.
  2. If there is such language, the lender may go ahead and sale the house using one of two procedures:
    • If the loan's provisions include a procedure for selling the home, those provisions will govern how the sale of the home is conducted.
    • If there is no such language in the original loan's provisions, the procedure that was outlined above for a judicial sale is used with a few minor modifications.

Here are those few modifications:

  1. The lender must publish a notice of foreclosure sale date for only three weeks in a newspaper that is published in the same county where the home resides.
  2. The sheriff who conducts the sale may move the date of the sale as he sees fit. Otherwise, the procedure that was outlined above is used throughout the sale of the home.