In any housing market, you’ll likely experience a lot of competition – and the State of Iowa is no exception. With good homes being sold all the time, it can be tough to find a good housing deal. To get an advantage in your house hunt, you need to know the local mortgage and refinance rates.
In this guide, we provide you insider access to the latest mortgage rates in Iowa. With these rates and our home buying tips, we’ll help you find the most affordable housing deals in the state!
Mortgage Options In Iowa
You have three loan types to fund your home purchase in the state. To help you make an informed decision, we break down each of them.
Conventional Home Loan
This is the most common mortgage available, typically offered by banks and other mortgage companies. Conventional loan amounts are limited by the Federal Housing Finance Agency. Across the entire State of Iowa, loan amount limits are set at the national average of $548,250.
Conventional mortgages are further broken down into three types, each featuring unique rate schemes and terms.
The main feature of a fixed-rate mortgage is its static interest and annual percentage rate. Due to these fixed rates, your monthly payment also stays constant.
The predictability of fixed-rate loans makes them popular with first-time homebuyers and long-term financial planners. However, these loans tend to have a higher annual percentage rate compared to other mortgages.
Most lenders offer 30-year fixed-rate loan terms. However, 15-year and 20-year fixed-rate mortgages offer you a lower rate in exchange for a higher monthly mortgage cost.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages feature interest rates that change every year. ARM rate adjustments are made based on a market index chosen by the lender. ARMs also have an introductory period with fixed mortgage interest rates for the first several years.
Because rates on the introductory period are relatively low, ARMs are best taken if you want short-term savings. However, your monthly payment amount may fluctuate every year.
The introductory period on ARMs vary – while 5 years is most common, the period can last anywhere between 3 and 10 years.
Some homes may be valued over local lending limits. To buy these properties, you may need a jumbo mortgage. Taking a jumbo allows you to exceed local lending limits – with the caveat of higher mortgage rates.
Government-Backed Loan Programs
The U.S. federal government backs three major loan programs made to boost the homeownership rate in specific demographics, namely rural homebuyers, low-income borrowers, and military members.
Here are key details of the three loan programs:
FHA loans: This loan aimed at low-income homebuyers feature more affordable rates and a low down payment requirement. However, these benefits are balanced by a lower loan limit and you have to pay mortgage insurance fees for the entire loan.
VA loans: Designed for military members, these zero-down home loans offer competitive rates. To replace mortgage insurance fees, you’re required to pay a cost called funding fees at the start of this loan.
USDA loans: These loans are only applicable for homes in USDA-approved areas. The benefits of this zero-down loan include cheaper mortgage insurance fees and competitive rates.
Refinancing a mortgage entails taking out a new loan to pay off your current one. Refinances are usually used to modify your loan term or convert home equity to cash.
There are two types of refinances, each with its unique uses:
Rate and term refinance: This type of refinance is taken to change existing loan terms or take advantage of lower refinance rates. With a rate and term refi, you can convert an ARM to a fixed-rate loan so you can avoid the adjustable phase. You can also convert a 30-year fixed-rate loan to a 15-year loan to pay it off faster.
Cash-out refinance: Cash-out refis are used to liquidate your home equity. This refinance works by providing you a loan that’s larger than your current mortgage balance. Once your previous mortgage is fully paid off, you can use the remaining cash for other needs.
Current Mortgage Rates In Iowa
Mortgage rate trends in Iowa tend to be slightly higher than the national average. In this table, we present a closer look at the most current rates in Iowa. The mortgage & refinance rates listed here are taken from America’s top mortgage companies. We update this table daily!
Today’s Mortgage Rates in Iowa
(insert rate table here)
Your mortgage rates may vary depending on your current financial condition. Keep in mind that these rates are subject to change without prior notice.
If you’re looking for a personalized look at your Iowa mortgage rates, use the rate tool at the top of this page! Input your financial details and we’ll calculate a customized Iowa mortgage interest rate estimate for you.
First-Time Homebuyer Programs In Iowa
Through the Iowa Finance Authority, the state offers several homebuyer assistance programs to its residents. To qualify for these state-run offerings, you need to fulfill these requirements:
Provide a 3% down payment
Meet minimum credit score requirements
Complete a homebuyer education course
Buy a single-family home as a private residence
The FirstHome program offers loans with competitive rates and low fees for first-time Iowa homebuyers. In contrast to other home loans, your credit score won’t affect a FirstHome mortgage’s rates. On a FirstHome mortgage, the home value cannot exceed $294,000.
IFA Homes For Iowans
Available for first-time and repeat homebuyers, the Homes For Iowans program has higher income and purchase limits than the FirstHome. Homes For Iowans participants can buy homes valued at up to $360,000.
IFA FirstHome & Homes For Iowans Down Payment Assistance
For both IFA programs, the State of Iowa offers you two options of down payment, closing cost, and lender fees assistance:
A grant worth up to $2,500
A second mortgage worth up to $5,000. This loan must be repaid if you sell, refinance, or pay off the home
Buying A Home In Iowa
Buying homes can be a daunting process. If you don’t know what to do, you might end up wasting time and money. To help simplify the process, we’ve compiled this guide!
Step 1: Check Your Financial Readiness
The first step to buying a house is to check whether you can afford it. One of the most efficient ways to test this is to apply for a mortgage. During your application, you’ll be put through pre-approval where lenders check your financial health.
Once you get pre-approved, you’ll receive a pre-approval letter. This document contains key details of your loan like its loan type, maximum loan amount, and interest rate. You can also use it as proof of your financial readiness.
Step 2: Find A Local Real Estate Agent
A good real estate agent with local experience is your greatest ally. While their main job is to secure the best housing deals, you can also leverage their local knowledge of the state. Be sure to ask their advice about the area’s average property value, commute times, and other important details before choosing a neighborhood.
Step 3: Search For Potential Homes
One of the best places to start your house hunt is to find a neighborhood that fits your budget and lifestyle. Once you’ve chosen an area, work with your realtor to find the most affordable house that still fits your needs. If you end up under budget, you can use the remaining money for home improvement.
Step 4: Start Making Offers
You’re likely not the only one aiming to buy that house. If you’re looking to catch the seller’s eye, you can try offering above the listed home price. Before you do so, be sure to consult your real estate agent so you don’t end up overpaying.
Step 5: Schedule Examinations And Appraisals
After your offer is accepted, the next step is to check the house’s condition. Get the services of a home inspector and appraiser to help with your examination. Inspectors can pinpoint potential issues with the property, while appraisers help determine your home’s actual value.
Step 6: Close The Purchase
On closing day, be prepared to sign a lot of paperwork with your realtor present. Make sure you also have the money ready to pay your closing cost and lender fees. Once the paperwork is sorted, it’s time to move into your new home!
How To Get A Better Iowa Mortgage Rate
Mortgages are long-term financial commitments. Even the difference of a few rate points can save you thousands of dollars. To ensure you get the best Iowa mortgage rates, you can follow these tips!
Consider Buying Mortgage Points
Many lenders offer you discount points that allow you to get a mortgage rate reduction. These points are generally worth 1% of the loan each and give you a 0.25% rate reduction.
So if you buy 2 points on a $200,000 mortgage with a 3.5% mortgage rate, you’ll need to pay $4,000 to reduce your rate to 3%. If you can’t afford full points, some lenders allow you to buy half points as well.
Work With Mortgage Brokers
Independent mortgage brokers help you find the best mortgage deals. They can examine multiple lender offers and determine which one provides the best value. Having a broker work for you also frees you up to search for the perfect Iowa home.
Pay A Larger Down Payment
Providing a larger down payment reduces your loan balance, reducing the total amount you need to repay. Lenders are also more willing to give you better rates because you’re seen as a more trustworthy borrower. An added benefit to providing 20% down is that you can avoid mortgage insurance fees entirely.
Knowing the local mortgage rates puts you at an advantage when house hunting. This advantage is essential if you’re planning to compete in a housing market with ever-increasing demands.
Looking for the best mortgage deals for your Iowa home? Wesley LLC is here to assist you. Contact our professional team today for more mortgage resources and advice!