Iowa is a great place to buy a home, with a low cost of living, safe cities, and top education systems. However, if you’re new to the complexities of buying a newly constructed home, navigating the process can be challenging. 

Here at Hubbell Homes, one of Iowa’s largest home builders, we want you to enjoy the process, so we have organized everything you need to know about buying a home in Iowa. The more you know about the steps and Iowa's current real estate situation, the more prepared you'll be to navigate this intricate process.

Tips For Buying A House

TIP #1: Figure out your finances

Before you go browsing for a new home, you must sort out the important things first: understanding your finances. This includes evaluating your credit score, debt-to-income (DTI) ratio, and the fees associated with buying a home. Grab a calculator, your financial records, and your patience because it’s time to figure out what type of house in Iowa you can afford.

• Your credit score. Before doing anything else, you’ll need to check your credit score. Understanding your credit score is a top priority in the process of buying a house because your credit score will dictate whether you can secure a loan. The rule of thumb for buying a house in Iowa is to have a credit score of at least 620 for most conventional loans.
• Your debt-to-income (DTI) ratio. Debt-to-income ratio is another important factor. Calculate your DTI by adding up your monthly expenses and dividing that number by your pre-tax income. Your monthly expenses do not include non-debt-related costs such as groceries or health insurance. Generally, a conventional loan requires an after-mortgage DTI of less than36%; a VA loan, less than 41%; and an FHA loan, less than 43%.
• Your down payment. The down payment amount will play a big part in deciding what type of house you can afford. Typically, a conventional mortgage requires a down payment of at least 20%. If you are unable to make a down payment of 20%, a loan through the Federal Housing Administration (FHA) or Veterans Administration (VA) may be a better option.
• Your closing costs and other fees. The closing costs here in Iowa are some of the lowest in the country. The average closing cost in Iowa is around $2,200 after taxes, which is approximately 1.14% to 2.27% of the final home sale price. Keep in mind that you usually have to pay these costs out of pocket. 

TIP #2: Get preapproved for a mortgage

When you have your finances in order it’s time to prequalify for a mortgage. This is absolutely necessary because a preapproval letter is required to show that you are serious about buying a home, can obtain a mortgage, and are in a good spot for financial negotiations. 

Don't start the preapproval process until you are ready to buy. After you’ve completed the necessary steps, your lender will verify that it’s correct and perform a hard credit check, which could temporarily lower your credit score. 

The main things to consider when picking a mortgage is the mortgage term and the interest rate. Typically a mortgage term is either 30 years or 15 years. With a 30-year mortgage term, you’ll have a lower monthly payment but a higher interest rate. If you choose a shorter-term mortgage, you’ll have a lower interest rate but you’ll make a higher monthly payment. When deciding on a loan, you also should compare options from a couple of lenders.

TIP #3: Find your new home

Finally, the fun part of your home buying journey! Now that you understand your financial situation and have obtained preapproval for a mortgage, you’re ready to browse for homes.

Start by deciding what is most important to you, while staying within your price range. Figure out what you want in terms of cost of living, culture, and lifestyle. Some things to consider are rising home values, and proximity to schools, restaurants, and shopping.

Hubbell Homes is currently building in desirable communities in Des Moines (including downtown!), West Des Moines, Norwalk, Ankeny, Altoona, Johnston, Carlisle, Urbandale and Waukee. And we have a variety of available homes in a range of styles, locations and price points if you want to move sooner rather than later.

TIP #4: Build & close on your home

Once your new home is built and you have completed your detailed walkthrough, your lender finalizes your financing, and you are ready for closing!

Closing is the process of finalizing your mortgage and transferring ownership of the property. To become a legal homeowner in Iowa, you'll have to complete two final tasks:

• On closing day, you'll meet at the title company to finalize your paperwork and settle the closing costs. You will review and sign several important documents that will transfer the title to your name.
• After signing the paperwork, you’ll pay the closing costs. The title company makes this simple by collecting the total amount, and then distributing these funds. Closing costs typically fall into four categories: lender fees, title & escrow charges, prepaid costs, and miscellaneous costs.

House Buying Tips

Buying a house is an exciting milestone, but the process can take some time. When you follow these house buying tips about your financial situation, market conditions, and what you can afford, you will be ready to find your new Hubbell home in Central Iowa. If you have questions about purchasing or building your new home, contact us today!