Buying a home is a significant milestone in one’s life (and probably the most expensive purchase), so you should approach it wisely, considering every detail of the process. If you’ve decided to buy a home in Iowa, this step-by-step guide is for you.
Step 1. Identify your buying power
For starters, decide how much you want to spend. With a median sale price of $265,900, Iowa has various options that are way more costly and affordable. To find a home that best meets your budget, don’t hesitate to get professional assistance from an experienced realtor in Iowa.
Also, remember the variety of one-off and ongoing costs of purchasing a home, which can add an extra 15% to the price of the property, and even more if you consider substantial redecoration.
Even if you aren’t a cash buyer, you’ll still need to budget for the down payment, part of the price you pay upfront at closing, while the mortgage lender covers the remaining balance. Remember that if your down payment is less than 20% of the home price (around $38,000 for a typical home in Iowa), you’ll be required to purchase mortgage insurance, which means paying more interest.
Additionally, check if you qualify for any of Iowa’s down payment assistance programs:
- IFA FirstHome
- IFA Homes for Iowans
- IFA Military Homeownership Assistance.
Step 2. Get mortgage pre-approval
Before lending your money, your mortgage lender will examine your financial situation (total income, debt, and cash reserves) to estimate how much you can borrow for buying real estate property.
Most Iowa sellers require a pre-approval letter before showing you the home to ensure you’re financially capable of buying a home. A mortgage pre-approval letter is an official offer stating the maximum amount of money you can borrow to buy a house.
Of course, you don’t have to choose the lender right away. It’s a good idea to compare interest rates and pre-approval amounts offered by different lenders to secure the best deal.
Step 3. Choose a neighborhood
With a better sense of your budget, it’s time to consider where you want to live. To shortlist available options, focus on the following factors:
- your home buying budget
- whether you’ll work from home or commute
- if good schools are essential for you
- crime rates
Step 4. Find a real estate agent in Iowa
A real estate agent will become your reliable partner in the home buying process. Apart from finding homes, the agent of your choice must be experienced in buying houses in Iowa. A real estate agent will help you make offers, negotiate agreements, and deal with closing. Your agent can refer you to other essential service providers, such as title companies and inspectors.
While selecting a real estate agent in Cedar Rapids, Des Moines, Davenport, or any other city in Iowa, make sure you pay attention to the following criteria:
- years of experience
- number of transactions in the previous year
- experience of buying homes within your budget
- clients’ reviews
- experience of buying houses in the neighborhoods that interest you most
Step 5. Start looking for a home
Once you know the neighborhood you want to live in, research homes in that area, visiting as many properties as possible. Before doing your research, draw up a list of the features you’d want your future home to have and prioritize them. Also, consult your real estate agent to help ensure that your wishes tally with your budget.
Notably, the season of your house hunt in Iowa can considerably affect the number of options. In June, there are usually most homes for sale, while this number tends to decline to almost half in January.
Step 6. Make your offer
When you decide which home you want to purchase, get your offer ready. Your real estate agent will help you create an attractive offer to convince the homeowner to sell the house to you.
Step 7. Have inspections and appraisals carried out
Inspections and appraisals allow a homebuyer to assess the property’s condition and value before signing the contract. Based on their results, you can renegotiate the terms.
Although sellers in Iowa are obliged to provide a disclosure before accepting a buyer’s offer, hiring a licensed inspector will give you extra peace of mind. The inspector should check the roof, foundation, plumbing, electrical, and HVAC systems. You might also want to have your potential Iowa home inspected for radon gas and termites.
An appraisal is an expert opinion of a home’s value. If you’re using a mortgage to purchase real estate, the lender will require an appraisal to ensure the home price reflects its actual value.
Step 8. Complete the sale
Finally, when you’re done with the inspections and the lender approves your mortgage, you are ready for closing, i.e., finalizing the mortgage and transferring ownership. You’ll need to review and sign several documents for transferring the title to your name: the finalized loan application, the deed, and the promissory mortgage note.
As soon as the paperwork is signed, you’ll have to cover your closing costs, including lender fees, title and escrow fees, property taxes, homeowners insurance, inspection fees, real estate attorney fees, etc. In Iowa, homebuyers usually pay 3-5% of the home price in closing costs.
