Michigan is a thriving state with breathtaking nature and affordable homes, especially for families and working professionals. While it's easy to feel overwhelmed in the homebuying process, there's plenty of help available to you in Michigan. This page is a step-by-step guide to getting a mortgage in the Great Lakes State.
Check Mortgage Rates in Michigan
The most important factors in getting a great rate come down to you: How much you earn, how much you borrow, what put down, and whether you have good credit (though in certain exceptions, a little bit of bad credit shouldn't disqualify you from a mortgage).
Rates also vary from state to state, and even county to county, depending on numerous other factors including available inventory and whether there are a lot of foreclosures in the area. Fortunately, Michigan currently has a healthy housing market. Additionally, the state's unemployment rate is just 4.7 percent, and wages and employment are both predicted to continue growing. The median home value in Michigan is $124,600. For a centralized explanation of what drives rates, visit our guide to mortgage rates.
First-Timer? Get Homebuying Help in Michigan
Michigan offers several programs for first-time buyers, but it's still important to talk with a broker or loan officer who may know of other programs.
Down payment assistance is offered to qualifying residents, with a maximum of $7,500 toward closing costs and other loan fees. All adults living in the residence must qualify, and the minimum credit score is 640. Homebuyer education is required.
The mortgage credit certificate program issues a federal tax credit for first-time and repeat buyers. Twenty percent of your annual mortgage interest paid can be credited against your year-end tax liability for the life of the loan. For an in-depth explanation of the homebuying process, visit our first-time homebuyer's guide.
Financial Assistance in Michigan for First-Time Buyers
Find everything the first-time Michigan buyer might need here, from down payment assistance to help with closing costs:
Find a Housing Counselor in Michigan
Understanding Home Affordability in Michigan
Many things affect what you'll end up paying for a mortgage. With interest rates at historic lows and home values on the rise, people are rushing to buy homes in places with strong economies. Michigan is definitely one of those places.
Forbes.com recently declared Grand Rapids the best place in the U.S. to buy a house. The greater Grand Rapids area economy has grown rapidly, with the unemployment rate at 3.9% as of 2015, and the annual job growth rate rising at 2.7%., Also, mortgage delinquency rate (when people miss a mortgage payment) as of April, 2016 is 2.16% compared to the U.S. average of 3.12%, and the rate is steadily declining. Homeowner equity is also increasing. This adds up to a hot market. Right now, the median sales price of a single-family home in Michigan is at $153,340, and the median value at $124,600, according to Zillow.
How Mortgage Rates and Home Prices Affect Monthly Payments in Michigan
|Metro Area||Estimated Monthly Mortgage Payment*||Q1 2016 (Change from Previous Year)||2015 Median Home Price||2014||2013|
|Ann Arbor||$1,057||$224,900 (+0.10%)||$232,100||$224,800||$209,700|
|Grand Rapids||$704||$149,800 (+9.30%)||$150,800||$138,300||$128,400|
Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today's rates.
Determine How Much You Can Borrow in Michigan
Conventional loan limits are set by the county where the home is, and set using the highest median home price within the metropolitan area. FHA limits vary from one county to the next. They are based on the Home Price Index (HPI) and get updated every year. For Michigan, the limit is $271,050 for single family homes in all counties. Use the tool below to find conforming and FHA loan limits by county in Michigan.
Buying a Home in Michigan: Experts Weigh In
Jon Wallace is a loan originator at Horizon Bank in St. Joseph, Michigan.
Doug Ardy is a mortgage loan originator at Gold Star Mortgage in Grand Rapids, Michigan.
Jeff Tuffordis a loan originator for Epic Mortgage Group in Grand Blanc, Michigan.
How has the real estate climate changed in your state since the market crisis? Is now a better to time to refinance or purchase?
That depends on where one is in the state. Detroit, Saginaw and Flint are not in the same condition as most of the state. The old cliché of "location, location, location." Lake front properties were never really impacted by the crash and always hold their value. Holland and Grand Rapids are just exploding in sales and new construction. The inventory of quality homes is low though, so it's a seller's market. Homes in good condition in good neighborhoods usually have 5-6 offers within an hour of the listing and are selling for more than asking price. At the same time, rates haven't been this low in over four years. The 10-year treasury bond has NEVER been as low as it is now so more existing homeowners should be taking advantage of rates (10-, 15-, 20- and 30-year mortgages are priced off the 10-year US Treasury Bond by Fannie Mae, Freddie Mac, etc.).
The market has changed considerably since the market crisis. Numerous Michigan markets have experienced significant appreciation and demand. Many markets have returned to pre-crisis levels with demand outpacing supply.
Michigan home values have trended up quite a bit recently. This gives people the possibility of benefits that weren't available before: to roll in the closing costs and get rid of mortgage insurance.
What resources would you recommend for a new homebuyer?
Michigan State Housing Development Authority (MSHDA) has some data on home buying, and some programs too. The best resource for new homebuyers is a knowledgeable loan officer at a bank or credit union who will answer any and all questions and explain the process in detail to them. Otherwise, the national resources from HUD, PMI companies, and some lenders that talk about the process and what's required are consistent across states. Doesn't matter where you are, because mortgages are a federally controlled product.
FHA, Conventional and Rural Development loans.
How can someone with little to no equity refinance?
Right now HARP still applies to anyone who got a mortgage prior to May 31, 2009 and equity for the most part isn't relevant for them. Those who aren't HARP eligible need to at least run the numbers though. In the process of refinancing they're going to take a month off making a house payment (always) and they're going to be getting their existing escrow account for taxes and insurance back. Those two factors may wash out a lack of equity if they need to bring money to closing. At the same time, if you look at the national numbers, the housing market is really back to the value levels we saw before the crash (in most markets) so there should be equity. Particularly at how quickly homes are selling this year . . . at higher prices.
With near all-time low interest rates and the possibility of increased equity, now is a great time to explore refinancing. Homeowners now have something they haven't experienced in many years, and that is options: to sell their home and make a profit, or refinance and lower their monthly payment.
Be Aware of Michigan's Closing Costs
Michigan's closing costs match up with averages in many neighboring states, running close to $2000, though you can expect to pay more for surveying and attorney fees.
Doug Ardy of Gold Star Mortgage Financial Group points out that it's also important to consider how property taxes differ from county to county and home to home. "Not only do these affect the funds due at closing, but they also impact the ongoing cost of owning the home. When searching for homes, it is equally important to know the property tax amounts as it is the mortgage rate and payment before making a final purchase decision."
Average costs are as follows, with variations possible between counties: Average Origination Fee: $1,072. Average Third Party fee: $848. Broker fee: $1,058. Appraisal: $436. Attorney: $495. Survey: $650. For a full explanation of closing costs, and what to expect, check out our guide to Common Closing Costs.
Average Closing Costs in Michigan
Source: Bankrate's 2015 survey of closing costs.
Refinancing a Mortgage in Michigan
When refinancing a mortgage, whether to reduce your monthly payment or take out additional funds for home improvements, be sure to shop around. For folks who are attempting to refinance a mortgage to stave off foreclosure, The Michigan Homeowner Assistance Nonprofit Housing (MHA) in collaboration with MSHDA has federal funds to help borrowers in Michigan facing foreclosure. They are attempting to stabilize communities hard hit by foreclosures.
Michigan First Mortgage President Brian Seibert says, "Prices are continuing to go up so with today's low rates, it's better to purchase now instead of later. Many customers that have put down low down payments can now refinance out of mortgage insurance because of the appreciation of home value."
Jeff Tufford, a loan officer with the Epic Mortgage Group, says now is a good time to refinance because "mortgage rates will go up barring a catastrophe in 2017. So now is the time to get it while the getting is good, so to speak."
For more comprehensive general information on refinancing, check out our Guide to Refinancing.
More Michigan Mortgage Resources
These additional resources may answer other questions you have:
Financial and technical assistance for affordable housing, with savings matching programs for low-income residents.
Housing and homelessness resources for residents, among other things.
Women's resource center for housing can help homeless women seeking to rent or buy, along with other city-specific emergency resources.
Down payment and closing costs assistance program, tailored to qualified first-time homebuyers with as little as 1% down.
Down payment assistance program with strict eligibility requirements, and foreclosure prevention workshops. Also provides regular news regarding programs and other real estate-related information.
Investigates complaints of unfair housing practices, protecting homebuyers from discrimination.
Information for homebuyers, detailed advice about down payment assistance programs in the state.