No matter what stage you're in, buying a home can be stressful. That's especially true in today's market, which has been hampered by higher loan interest rates, low inventory and high-priced listings.

Whether you're in the market for a new home or your first home, it's easy to let yourself become intimidated by the prospect of home ownership. It doesn't have to be scary. With a little knowledge and preparation, you can be be prepared for the home buying process.

"Home ownership is a strategic investment in your future, but doesn't have to be a daunting venture," said Brenda Hannover, Assistant Vice President - Mortgage Lending (NMLS# 624001). "Even in today's market, owning a home is an attainable goal that fosters stability, builds equity and unlocks a wealth of possibilities."

Determine Your Purchase Readiness

Before you even consider buying a home, it's important to know how the home buying process works. It starts with making sure you're financially ready to make a large purchase. Factors to consider include:

  • Total savings
  • Total debt
  • Credit history

These factors will help determine your qualifying loan amount, interest rate and how much you can afford as a down payment.

When it comes to down payments, the more you can pay up front, the lower your monthly payments, and the higher your equity. Typically, home buyers try to put down 20%. This isn't a requirement, but doing so could help reduce the interest rate on your mortgage. If you are able to pay 20% as a down payment you may not have to pay for private mortgage insurance, which will save you even more money.

Once you determine you're ready to buy a home, it's a good idea to get pre-approved for a mortgage. By getting pre-approved, you will have a solid understanding of the amount of your home loan you qualify for, and it will eliminate that step when you are ready to make an offer.

Types of Loans

When you go through the pre-approval process, talk to your mortgage loan officer about the different loan options available. A conventional loan is the most common type of mortgage, but there are other loan options, especially for veterans and first-time home buyers.

Once you are pre-approved and have an idea of what type of mortgage you need, it's time to start home shopping. Be sure you stick to your budget as determined by your loan pre-approval amount. Look at as many houses as you can to get a sense of the type of home you want and need.

Documents You'll Need

Once you're ready to apply for your mortgage or pre-approval, you can make the process more efficient by having the following documents and information ready for your mortgage loan officer:

  • W-2 forms from the past two years
  • Pay stubs from the past 30 to 60 days
  • Federal income tax returns from the past two years
  • Bank statements from the last two months
  • Information about your other long-term debts
  • Driver's license and Social Security number
  • Any other information your lender requires

"Finding a new home may carry its share of stress, but it's equally a thrilling milestone," said Hannover. "Being prepared for each state of the home buying process enables you to fully enjoy the excitement home ownership brings."

More information

Contact our mortgage lenders at 515.295.3595 or homeloans@bankisb.com to discuss how Iowa State Bank can help you achieve the goal of home ownership, or start your application online with us.

This message is brought to you by Iowa State Bank in partnership with the Iowa Bankers Association.