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Your Guide to Buying a Home in Iowa

The Buying Process: A Summary

  • In the state of Iowa, real estate transactions can be completed by a variety of professionals, including a title company representative, lending official, or attorney. 
  • While you may have reached an agreement on price, you still need to finalize the details of your home purchase. 
  • To complete the mortgage, you will need to send a variety of fresh documents to the lender.
  • The closing will usually take place with both parties at the same table.
  • All of Iowa is under the base limits for conforming loans. Throughout Iowa, the limit for a single-family home is $647,200.

Buying a Home, Phase 1: Negotiating Repairs and Updates in Iowa

Although you and the seller have reached an agreement on price, there are still many details that need to be finalized, including negotiations for upgrades and repairs to the home. 

  1. Once you and the seller reach an agreement, you will both sign a contract, committing you to the transaction. 
  2. Earnest money, which shows your real intention to purchase the home, will be delivered to the title company or attorney. This should never be made directly to the seller, but will instead be held in escrow. 
  3. The signed contract will be sent to the attorney or title company who is overseeing the process. Once they receive the contract, they will begin a title search to make sure the home can be sold by the seller.
  4. At this point, you should review and sign off on disclosures, which should have been sent to you from the seller. These are simply statements of known issues with the home, and may include known damage or wear, or issues that need to be addressed in the near future. They may include a furnace going out, seepage in the basement, issues with the plumbing, or any number of potential problems. You will need to review and sign off on these disclosures.
  5. You can now perform a variety of home inspections. In the state of Iowa, a general home inspection is recommended first. Then, depending on the results of the general inspection, you may want an inspection for termites, radon, or lead paint.
  6. If you find any significant problems during inspections, you can request repairs to the home or a change in the purchase price. These requests must be made in writing before the final inspection date, which is outlined in the contract. The seller can negotiate in turn until a final agreement is reached. 
  7. You may also request a home warranty to cover the costs of repairs. 

Phase 2: The Mortgage Process in Iowa

If you are borrowing to purchase your home (as most buyers do), you’ll need to complete the mortgage after finding a home to buy. The process generally looks like this: 

  1. You will first submit an application, either on your own or with the help of a mortgage professional.
  2. In roughly three days, you will receive a “good faith estimate” from the lender. This is an estimate, to the best of their knowledge, of the final costs for completing the purchase. 
  3. Before they can make a final mortgage offer, the lender will need a variety of documents. These may include: 
  • Pay stubs and contract information from all of your employers. 
  • Tax returns for the past two years. 
  • Bank statements on all accounts you currently own.
  • Loan documents for any debts, including car loans, student debt, and other forms of debt. 
  • Disclosures on anything related to your finances. This may include child support, alimony, legal judgements, and other financial information. This should be included whether you pay or receive the money. (For example, include child support whether you are paying or receiving the money.) 
  • Explanation for any recent credit inquiries.
  • Information on any large deposits that are not part of your regular income. 
  • Gift letters if you are using a gift as a downpayment. The letter should include whether or not the money is a gift, and should state, in clear terms, that no repayment is required. 
  • Repeat or updated information on any of the above. Lenders want as much information as possible, so don’t be surprised if they ask for repeat information. 

4. The lender will eventually make a decision based on your documents and information. Assuming you are approved, you will be given a loan approval letter. You should send a copy of this letter to the seller. 

5. The lender will require an appraisal. (Unless there is an appraisal waiver or contingency waiver of some kind.) This is to make sure the home being borrowed against has a strong value. If the appraisal is low, changes to the purchase agreement will be required. But if the appraisal comes back with a strong number, the purchase can move forward. 

6. You will need to order homeowners’ insurance and deliver a copy of this insurance policy to the lender. 

Remember, this process takes time so it’s best to start as early as possible. Organize your documents and have them ready for the lender as soon as you can. Avoid changes to your financial situation and you will likely be approved for a top-quality mortgage!

Phase 3: Closing the Iowa Purchase

When the agreement is fully finalized and the mortgage is complete, you can move to the closing and receive the keys to your new Iowa home!

  1. A final cash figure will be calculated. This is the amount you’ll need to bring to the closing in the form of a cashier’s check. 
  2. You will perform a final walkthrough on the property to make sure there has been no significant damage to the home or the land. 
  3. You and the seller will meet at the closing table to sign all documents and finalize the Iowa home purchase. 
  4. You will pay the remaining funds for your downpayment, as well as other closing costs. 
  5. The representative from the title company or the attorney will record the final transaction with the appropriate Iowa town, city, or county. 
  6. You can now receive the keys and move into your new Iowa home!

Conforming Loan Limits in the State of Iowa

The entire state of Iowa is under the base limits for conforming loans. Set by the Federal Housing Finance Agency, the base limits are the absolute most a buyer can borrow when using a government supported loan such as an FHA loan or a USDA loan. 

In Iowa, the limit for a single-family home is $647,200. For a two-unit property, the limit is $828,700. If you want to purchase a property with three units, the limit is $1,001,650, while the limit for a four-unit property is $1,244,850. 

These are the limits all across Iowa in all corners of the state. It includes Polk County and the Des Moines area in the middle of the state, as well as all counties along the Mississippi, such as Alamakee County in the “driftless zone” down to Lee County, which borders Missouri. These limits stand from Fremont County in the southwest to Lyon County, which touches Minnesota and South Dakota. 

If you need a larger loan in the state of Iowa, we can help. There are options for larger loans, such as jumbo loan. Contact us today for information on Iowa jumbo loans. 

Note: Loan limits change every year, and limits many have been revised since this article was written. Contact a lending professional for up-to-date loan limits in your area.

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Chad Baker, CrossCountry Mortgage   
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