Homeownership is rewarding and complicated but it’s also a big investment.
Knowing more about getting your first home mortgage in Iowa will help you make informed decisions throughout the homebuying process. At LSB, we want to make your first-time home buying experience as simple and enjoyable as possible, which is why we’ve broken it into six achievable steps.
1. Know what you can afford
While you may have a certain home price range in mind, it helps to find out how much money your lender will let you borrow. The first step is to get pre-approved, which means giving your lender some basic information about your finances. You will also need to consent to a credit check. At LSB, our experienced mortgage lenders can discuss your current situation and home buying with you to provide insights on the mortgage application process and tips for establishing credit if needed. Here are the most important factors in determining your home buying budget:
- Monthly Net Pay: For you and your co-applicant if you have one. “Net” simply means your take-home pay, i.e. the amount of your check after taxes and other deductions have been taken out.
- 30 percent: The maximum amount of your monthly income that should be spent on a housing payment including mortgage principal and interest, taxes, and insurance.
- Down Payment: The amount of your down payment that is directly related to how much you’ll need to borrow. The more you can put down, the more you may be able to spend on a house.
- Property Taxes: Your mortgage lender collects a certain amount of money each month in your mortgage payment to put in an escrow account for the annual property tax bill. So, the higher the tax rates, the lower you’ll need to keep the cost of your house.
- Credit Score: This is tied to your interest rate, so a higher credit score usually translates to a lower rate.
2. Understand the costs that come with buying a home
As a first-time homebuyer, you’re probably unfamiliar with all the costs associated with buying a home, at least beyond the down payment. Here are other common costs associated with the home buying process:
- Earnest Payment: Ranges from 1-10% of the sales price and serves as a “good faith” down payment once the seller accepts your offer.
- Home Inspection: This isn’t mandatory, but highly recommended. A home inspector will go through every inch of the home you’re under contract on and provide a thorough report on the findings. This can save you from buying a house with major issues you weren’t aware of. You can also use the home inspection report to request repairs or a seller assist at closing.
- Closing Costs: These include loan costs such as the application and underwriting fees, title fees, and more. Your lender will provide you with a Closing Disclosure beforehand so you can review everything and know how much cash to bring to the closing table.
3. Find the Right Mortgage for You
When it comes to home financing, there’s no one-size-fits-all approach. LSB offers a variety of
loan programs to meet your specific needs, including:
- Conventional Mortgages: Includes fixed-rate and adjustable-rate loans.
- FHA Loans: Good for first-time buyers who need a lower down payment option.
- USDA Loans: Open to low- and moderate-income households in eligible rural and suburban areas.
- Construction Loans: Build the home of your dreams with flexible financing from LSB
- VA Loans: One of the most powerful benefits active-duty military and veterans earn is a VA home loan.
4. The Mortgage Application Process
Once you submit your loan application, your bank’s underwriters get to work behind the scenes before your loan is approved. During this time, you may be asked to submit additional paperwork or supporting documents. Try to respond as quickly as possible to keep the process moving along.
Want to know more? Download our
homebuyer’s guidebook to discover each of these steps in full detail and to find out the top 5 things NOT to do during this loan process.
5. Closing Time
Closing time is when you finalize your contract and sign a lot of documents to make your homeownership official. There are many important steps to take before closing day to ensure your experience is smooth and stress-free. These include getting a home inspection, selecting a homeowner’s insurance policy, reviewing the closing disclosure, and more. As your lender, we will be with you every step of the way and available to answer any questions you may have.
6. Moving In
Once you’ve closed on your home, you can finally move in! Make sure to file your closing packet in a safe place for future reference.
LSB is your go-to resource for everything about homeownership!
Your personal homeownership adventure can be quite the trek, but you don’t need to do it alone. Download our homebuyer’s guidebook to learn about each of the steps in great detail. If you have any questions along the way, our experienced lenders would love to help. Meet our
Iowa-based lenders and complete our
online application to get started today.
Lincoln Savings Bank
Member FDIC
Equal Housing Lender
NMLS #480330
Member FDIC
Equal Housing Lender
NMLS #480330
