The Best 2021 Iowa Mortgage Lenders
If you’re thinking of buying a home in Iowa, you’re in luck – this state is one of the cheapest to live in in 2021. With mortgage rates as low as 0.13%, you won’t be hard-pressed to find a home that suits your budget and preferences.
However, your loan officer has no control over interest rates, and they’re constantly fluctuating. To get the best mortgage available on the market, you’ll have to work with the best lender. Consider factors such as credit score requirements, closing costs, mortgage types, and customer satisfaction.
If you’re having trouble finding the right mortgage lender in the Hawkeye State, this guide is here to help. In it, you’ll learn about how to select the best mortgage lender and what your options are in Iowa.
How To Pick The Right Mortgage Lender
No two mortgage lenders are the same. Many will differ according to their application process, what mortgage types they offer, and what their fees are. Below are a few factors you should consider when making your decision.
Mortgage Loan Options
There are several ways to purchase your home through a variety of loan products:
- Conventional loan: A conventional loan requires applicants to have good credit, stable income, and have the money for a large down payment. These mortgages are backed by Fannie Mae and Freddie Mac, with borrowing limits that vary by state. In Iowa, the borrowing limit for a home loan is $484,350.
- Fixed-rate: As their name suggests, fixed-rate conventional loans have unchanging interest rates and are typically available in 10, 20, or 30-year terms.
- Adjustable-rate (ARM): These mortgages adhere to a fixed rate for a given period, then fluctuate yearly according to the housing market. ARMs typically come in 3/1, 5/1, 7/1, and 10/1 terms.
- Government-backed loan: Those who have poor credit, low income, and cannot qualify for a conventional home loan can apply for a government-backed loan by the Federal Housing Administration (FHA). Through this type of mortgage, potential homeowners can place a down payment as low as 3.5%. Government-backed mortgages also cover VA loans, which provide housing for active or retired military service members.
- Rural housing loans: Homebuyers with lower income looking to buy homes in a rural area can apply for a loan through the U.S. Department of Agriculture (USDA). This mortgage type requires little to no down payment.
- Mortgage refinance: Also known as a refi, this type of mortgage allows applicants to consolidate debts or pay off an existing loan.
Types Of Mortgage Lenders
The different types of mortgage lenders include:
- Direct lenders: These lenders include banks, credit unions, and individual entities that provide loans directly to applicants. Direct lenders keep the process in-house and openly discuss factors such as fees, down payments, and closing costs. What you pay will vary across different lenders.
- Mortgage brokers: These entities don’t provide loans directly. Instead, they match you up with the proper loan officer depending on your budget and preferences. They generally charge between 1% and 2% of your total loan amount for their services.
- Wholesale lenders: Wholesale lenders don’t work directly with borrowers. Instead, they work with mortgage brokers to offer loan products at lower rates.
Affordability
Interest rates aren’t the only factor that will determine how affordable your mortgage loan is. You will also have to consider the following:
- Minimum credit score: Most mortgage loan officers will accept a minimum credit score of 620, though they will occasionally work with lower ratings. Having a higher credit rating can get you better terms and lower rates.
- Minimum down payment: Typically, a mortgage lender will ask for a down payment of at least 20%, though they sometimes go as low as 3%.
- Closing costs and fees: Aside from a down payment, borrowers will have to set aside money for application and lender origination fees, inspections, underwriting costs, and other services – this can cost hundreds or even thousands of dollars, depending on your loan officer.
Application Process
When shopping for a mortgage lender, a few things you’ll want to consider about their application process include:
- Convenience: You may want to prioritize mortgage loan officers who offer their services online. They can cater to applicants who are located far away from their physical branches or have a busy schedule.
- Rate transparency: Online tools such as mortgage calculators and transparent fees can be helpful. Through them, you can determine how much money you have to set aside for things like down payments and closing fees.
- Time: Depending on whether you are working with a bank or independent mortgage lender, the application process can take weeks or even months.
Customer Satisfaction & Reviews
If consumers aren’t happy with a particular mortgage lender, it will show online. You can get a better picture of how a mortgage lender treats its client by reading online reviews or consulting the Better Business Bureau (BBB), which grades lenders from F to A+. The JD Power firm also publishes customer satisfaction studies and provides other valuable resources on its site.
Top 5 Iowa Mortgage Lenders
If you are applying for a home loan in Iowa, here are the top 5 mortgage lenders you want to consider.
Quicken Loans: Easy Online Application
Minimum credit rating: 620 for conventional loans, 680 for jumbo loans, and 580 for FHA loans
Minimum DP: 3%
Mortgage offerings:
- Conventional
- Jumbo
- FHA
- VA
- Reverse mortgages
BBB Rating: A+
JD Power rating: 883
Overview: Quicken Loans is the most popular online lender for consumers across America. They are known for their flexible-term home loan products such as YOURGage, which allows homebuyers to choose their own terms. Clients can access information and reach customer service every day of the week. On their site, you’ll also find many buying guides, financial tools, and popular mortgage topics.
Availability: Available to consumers buying a home in any state
New American Funding: Best For Nontraditional Credit
Minimum credit rating: 620
Minimum DP: 3%
Mortgage offerings:
- Conforming
- Reverse
- Government-backed
- HELOC
- Jumbo
- Home equity
BBB Rating: A+
JD Power rating: N/A
Overview: If you have less-than-stellar credit, the pro of working with this mortgage lender is its alternative methods of calculating credit. Even consumers with no credit can get help buying their first home. Alternatively, those with a more attractive credit history can benefit from its online application process and select from a long list of mortgage products.
Availability: Iowa and all 49 other states
Navy Federal Credit Union: Best For Military Service Members
Minimum credit rating: 620
Minimum DP: 0%
Mortgage offerings:
- VA
- Military Choice Loan
- Homebuyers Choice Loan
- Jumbo
BBB Rating: N/A
JD Power rating: 813
Overview: If you are part of the active military or a veteran, buying a home from the Navy Federal Credit Union is the best decision. It is the largest credit union in the U.S., employs multiple lenders, and has over 300 branches. It specializes in VA loans and provides options for those who don’t have the money for a property down payment.
Availability: Iowa and all 49 other states
Bank Of America: Lowest Rates
Minimum credit rating: 620
Minimum DP: 3%
Mortgage offerings:
- Conventional
- Fixed-rate
- ARM
- Jumbo
- FHA
- VA
- HELOC
- Refinance
- Affordable Loan Solution
BBB Rating: A+
JD Power rating: 860
Overview: The Bank of America has been operating for over 200 years and is hailed for its wide variety of banking products. Compared to other mortgage lenders, it charges lower fees and offers assistance for those in search of their first home. Those banking with a HELOC do not need to pay annual fees, either.
Availability: Iowa and all 49 other states
Better Mortgage: No Lender Fees
Minimum credit rating: 620
Minimum DP: 3%
Mortgage offerings:
- Conventional
- Fixed-rate
- ARM
- Jumbo
- Rate-and-term
- Cash-out financing
BBB Rating: B
JD Power rating: N/A
Overview: If you want to find and purchase a property entirely online, the best way to do it is through Better Mortgage. This mortgage lender offers complete underwriting on its website from start to finish. You can also track your approval status with the help of a dedicated loan officer. Better yet, consumers don’t have to pay lender commissions.
Availability: Iowa and all other states except for Hawaii, Massachusetts, and Nevada
The Bottom Line
If you are in search of a new home in Iowa, you can start looking through the options listed above. Ultimately, the Iowa mortgage lender you select will depend on the property you want to buy and what you can afford.
For more information about how to buy a home, contact our experts at Wesley Mortgage LLC. We can direct you to the right lender or bank and offer helpful resources to quicken your search.