How to Buy a House in Michigan: A Homebuyer’s Guide
Updated: July 24, 2023
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The average value of a home in Michigan is $237K, which has increased by roughly 10% in the last year. Although the value of a home in Michigan has steadily increased, it is still significantly cheaper than the national average at $358K.
Homebuyers will be happy to learn that Michigan is the 11th cheapest state to own a home in, with mortgage payments averaging $1,031 per month. However, the cost isn’t the sole factor that Michigan homebuyers should consider when shopping for a home. The location in which you live, for instance, is equally important.
Understanding how homebuying works can make the process easier on the buyer’s end. This guide shares how to tackle the application process while avoiding deep debt.
Choose an Ideal Location
Where you choose to live can have a significant impact on the value of your home, cost of living and mortgage costs. Aside from these aspects, location can also determine access to certain amenities, available recreational activities and neighborhood culture. One way to choose a preferred city or county is to evaluate your budget, lifestyle and priorities.
Calculate Mortgage Rates
Computing average mortgage rates in Michigan is key if you’re going through the homebuying process. The cost of your mortgage is affected by factors like your credit score, monthly income, interest rates, loan type and limit. To find a suitable mortgage rate for your needs, it’s advisable to compare lenders based on service quality, terms and rates.
Prepare Down Payment Requirements
The type of mortgage you choose will determine your down payment. Low-down-payment programs have a down payment rate of as low as 3.5%. Researching a suitable mortgage type might be able to save you more in the long run.
Get Pre-Approved for a Mortgage
It’s best to get pre-approved for a mortgage before buying property in Michigan. In some cases, sellers will ask for pre-approval from your lender before showing you a potential home.
While the terms sound similar, there are key differences between pre-approval and prequalification. Pre-approval is a commitment that states how much a lender is willing to loan, and it includes documentation of several aspects of the borrower’s finances, whereas prequalification merely indicates that a borrower qualifies for a mortgage.
Conduct a Home Inspection
While it isn’t legally required, it’s good to include a home inspection in the homebuying process. A professional home inspector can provide a clear picture of the home’s current condition so you can anticipate potential repairs. Keep in mind that the homebuyer will shoulder the home inspection fee, which can cost up to $500.
Close Your Mortgage Loan
After you’ve completed a home inspection and appraisal, one of the final steps in the homebuying process is to settle any closing costs. This typically includes appraisal charges, a document preparation fee and more. Please note that you also have to anticipate expenses related to legal work and additional home inspection fees.
Frequently Asked Questions About Buying a Home in Michigan
If you’re curious about how to buy a home in Michigan, MoneyGeek answered commonly asked questions. The answers can help you prepare for the homebuying journey.
sources
- Consumer Financial Protection Bureau. "Get a prequalification or preapproval letter." Accessed October 24, 2022.
- Consumer Financial Protection Bureau. "What is mortgage insurance and how does it work?." Accessed October 24, 2022.
- International Association of Certified Home Inspectors. "Home Inspection Standards of Practice." Accessed October 24, 2022.
- Michigan Legislature. "Seller Disclosure Act." Accessed October 25, 2022.
- State of Michigan. "Homeownership." Accessed October 25, 2022.
- State of Michigan. "MI Home Loan." Accessed October 25, 2022.