Today's Rates In Iowa
Finding the best Iowa mortgage rates involves more than just checking the ads or web sites of various lenders to see who's got the lowest numbers. Mortgage rates can be tricky and by themselves may not reflect the true cost of a home loan.
Let's say you're looking to buy a home and all the Iowa 30-year mortgage rates that you see offered by lenders fall within a certain range. Then you come across a lender offering a 30-year rate that's a full quarter of a percentage point lower than everyone else. Wow! That's gotta be the one, right? What a deal!
Then you look a little closer. You see something that says "Points – 3.5." And another figure called "APR" that's a lot higher than the rate – and seems to be higher than what you recall seeing on other lender's listings.
Congratulations. You've just begun to learn how Iowa mortgage rates work – and those in the rest of the country as well.
You see, the rate is only part of the cost of your mortgage. You also have to take into account the closing costs and fees that are included with the loan as well – particularly if the rate includes discount points, mentioned above. But just by knowing that, you're already a step ahead of the game.
So how do you make the comparision? How do you find the best Iowa mortgage rates for you?
Fortunately, you've come to the right place. Here at MortgageLoan.com, we've got the information and tools you need to become a savvy mortgage borrower. Browse our extensive collection of mortgage articles, look up unfamiliar terms in our glossary, use our various mortgage calculators to crunch numbers and obtain free, no-obligation quotes for Iowa mortgage rates based on your borrower information and the loan you are seeking.
To start you off, here are some of the most important things to know about Iowa mortgage rates and home loans in general.
Focus on the APR
Remember APR, which we mentioned up above? As a rule of thumb, it's better to focus on the APR (annual percentage rate), rather than the mortgage rate, when shopping for home loans. The APR reflects the whole cost of the loan – interest rate and fees – and expresses it in terms of an annual percentage rate. It's basically the rate that would give you the same monthly payment as the mortgage rate would if you rolled all your fees into the loan.
By law, the APR must be included with any offer or advertisement for a mortgage rate. It's a very good guide for comparing fixed-rate loans, but is not as useful on adjustable-rates, as the rate there can vary. It also assumes you'll pay off the loan over its full term, so it can be thrown off if you refinance or sell the home before the loan is paid off. If you think any of those situations might apply to you, you can use one of our mortgage calculators to do a more precise comparison of the offers you get for Iowa home loans.
Discount points are another thing to be aware of when comparing Iowa mortgage rates. Also mentioned above, discount points are a way of buying a lower mortgage rate by prepaying interest. Each point costs 1 percent of the loan amount and reduces the rate by a certain amount, usually one-eighth to one-quarter of a percentage point.
Discount points can save you a lot of money over time, especially if you don't sell or refinance for many years. But they also can be used to disguise the true cost of a loan offer with a low rate. Many advertised rates will include at least a fraction of a point in the rate, but be extra careful about rate offers that include two or more points.
Types of home loans
You have a lot of options when it comes to Iowa home loans. Some of the most popular ones are:
Conforming loans: These are the most common type of home loan and are offered by nearly all Iowa mortgage lenders. The get their name from the fact these loans conform to the standards established by Fannie Mae and Freddie Mac, two government-chartered agencies that back these loans. They're usually the first choice for borrowers with good credit, though borrowers with less-than-ideal scores can qualify as well.
FHA loan: Iowa borrowers who are looking to buy their first home often turn to these loans. Borrowers with lower credit scores can often get better rates with an FHA loan and Iowa FHA loan requirements allow down payments of as little as 3.5 percent, making them an attractive option for anyone with limited finances or credit.
Iowa FHA loans can also be used as "fixer-upper" loans, through what's called the FHA 203(k) program, which allows you to borrow money for home repairs or improvements as part of the loan used to purchase the property.
15-year vs. 30-year mortgage rates
The length of a mortgage has a big effect on your mortgage rate. Iowa 30-year mortgage rates run higher than those on 15-year loans, often half a percentage point or more. This makes 15-year loans a popular choice for people who are refinancing a 30-year mortgage they've had for several years, as they may be able to trim a few years off their loan without increasing their monthly payments very much. Thirty-year loans are a popular choice for first-time homebuyers, as it helps keep their monthly payments low. Both conventional and FHA loans are available in 30- and 15-year terms, and some lenders may offer 20- or 10-year terms as well.
Despite previous credit problems, you can obtain a mortgage in Iowa. Realistically though, finding that bad credit mortgage loan may take extra research. There might be some subprime lenders that don't have your best interests in mind. But that's alright, because you have access to the information you need to protect yourself. First, make sure you shop around. Second, review all loan quotes very carefully, particularly the terms for adjustable-rate mortgages (ARMs). You need to be entirely comfortable with the prospect of rate and payment increases over time. It isn't a good idea to assume that you can refinance a mortgage just before the payment goes up; the climate for refinancing is heavily influenced by economic cycles, which are tough to predict.
Comparing Mortgage Rates
When shopping for Iowa mortgage rates, it's important to get personalized quotes from several lenders. You can contact them directly, or use an online form such as the one at the top of this page to request personalized quotes from multiple lenders – it's a free service with no obligation. Then compare your offers, keeping a careful eye on lender fees and the APR. Check out the numbers using a mortgage calculator. Then when you've made your choice, contact the lender to start your application and lock in your rate.