Iowa State Bank

The Mortgage Process | Types of Mortgage Loans

TYPES OF MORTGAGE LOANS

First-Time Home Buyer’s Program – This program offered through the Iowa Finance Authority can help you obtain a below-market interest rate for first-time home buyers.

Program Specifics

Used to finance a mortgage on new and existing single family homes.
Long term financing with fixed interest rates.
Minimum buyer contribution.
No origination fee or discount points are charged. Closing costs are minimal and can come from a gift or grant.

Eligibility

You must be a first-time home buyer. This is defined as no home ownership in the last 3 years.
Your home purchase must be in a targeted area.
There is a maximum household income limit and maximum purchase price allowed.
The home must be owner-occupied.
You will need an acceptable credit history and demonstrate your ability to repay the loan.
Offers less restrictive qualifying guidelines.

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Fixed Rate Mortgages – With this type of mortgage loan, your payment will be the same amount throughout the term of the loan. You will know exactly how much you will pay in principal and in interest. You will benefit from a fixed rate if you have a limited income because you’ll have a consistent payment schedule that’s easy to budget. A fixed interest rate is generally a little bit higher, but offers security because you have one rate even if interest rates rise. Remember that taxes and insurance may change from year to year.

Adjustable Rate Mortgages (ARM) - This type of loan offers a variable rate which usually starts at a lower rate, but runs the risk that interest rates may rise. The rate will go up or down on fixed intervals and adjusts based on economic indicators. This allows you to pay a competitive rate according to a fixed schedule. A cap will be determined that limits the interest rate to increase or decrease a certain percent from one adjustment period to the next. In addition, a ceiling will be listed that limits how much the rate can increase over the life of the loan.

Having an adjustable rate is a good opportunity if you:

Plan on living in your home for a short period of time.
Believe interest rates are high now and think they will go down.
Want lower initial payments.
Expect to earn more in the future.
Are able to handle future rate increases.

Balloon – If you’re looking for flexibility and a competitive rate, a balloon mortgage loan will help get you started. Your payments are based over a long-term; however, the balance is due at the end of the set term. You may have the option of extending the balance at maturity for the remaining term at an adjusted market rate.

Government Programs – Iowa State Bank offers financing through government programs such as: The Federal Housing Administration (FHA) and Veterans Administration (VA). These programs can provide flexible financing arrangements for specific home buyers who meet program qualifications. Flexible terms are provided by lower down payments, financing of closing costs, and less restrictive qualifying guidelines. These home mortgages require insurance through the FHA or VA, rather than a private insurance company.

Community Reinvestment Homeowner’s Program – Iowa State Bank is committed in our efforts to help more people own their homes in the Des Moines metropolitan community. We feel strongly that this program has contributed to our OUTSTANDING Community Reinvestment Act rating by the FDIC for the past 10 years.

Iowa State Bank's Community Reinvestment Home Loan Program provides an opportunity for individuals and families to qualify for a mortgage loan who otherwise may not have. This home loan program requires a minimal down payment and has less restrictive loan qualifications in terms of debt-to-income ratios and credit history. It is one of the programs that represent Iowa State Bank's commitment to you as we continue to serve all of our community.

If you are wanting to buy an existing home or improve an existing owner-occupied home within Iowa State Bank's community delineation in an area designated as Low-to-Moderate Income by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development you may qualify for this program. In addition, if you are a currently making 80% or less than the median income, you may qualify for this program regardless of your home's location. There is no minimum loan amount for home purchase or home improvement loans.