Are you getting ready to make the jump from renter to homeowner? Our guide to the best mortgage options and the home buying process in Michigan will make shopping for the perfect property easier.
Step 1: Consider Current Michigan Mortgage Rates
Every mortgage loan payment includes 2 parts: a payment toward the principal balance that you originally borrowed and interest. Your interest goes directly to your lender in exchange for giving you your mortgage loan. Most lenders calculate interest in terms of an annual percentage rate, or APR for short.
The specific APR you’ll pay for your loan will vary depending on your credit score, the type of loan you’re choosing and your lender. Average market rates change over time. In some cases, you might notice average market rates changing on a weekly or even daily basis. Your local housing supply, bond interest rates and even the overall economy of the United States can all influence what you’ll pay for your loan.
Here’s a table of average interest rates in Michigan today. We update this information on a regular basis to ensure that you have access to the most recent market rates.
|7/1 ARM (adjustable rate)||5%||4.091%|
|5/1 ARM (adjustable rate)||3.3%||3.231%|
Step 2: Pick a Mortgage Lender in Michigan
There are many mortgage lenders offering all types of loans to home buyers in Michigan. If you aren’t sure which lender you want to work with, consider a few of our favorites below.
1. Best Overall: Quicken Loans®
Quicken Loans is one of the best mortgage lenders for first-time buyers that offer a wide range of loan terms and types. Quicken Loans’ YOURgage® program allows you to choose a custom term between 8 and 29 years, with 30-year loans also available. The lender offers almost every type of mortgage loan, including government-backed loans and conventional loan options.
First-time buyers who work with Quicken Loans enjoy a streamlined, easy preapproval application process. Quicken Loans’ application is so simple that you can easily complete it from your phone or tablet. In most cases, you’ll receive a loan decision instantly after applying.
2. Best for Veterans: Veterans United
VA loans are a special type of government-backed mortgage loan that may allow you to buy a home with 0% down. VA loans are only available to you if you’ve served in the armed forces and you must meet specific service requirements before you may apply.
Veterans United is one of the country’s top-rated lenders for veterans, with an average rating of 4.7 out of 5.0 stars. Veterans United employs a full team of former service members from each branch of the military who can assist you in getting your Certificate of Eligibility (COE) required to qualify for a VA loan. If you don’t currently qualify for a VA loan, Veterans United can also help you find a conventional loan that works with your budget.
3. Best for Self-Employed Buyers: Luxury Mortgage
You might be surprised at how much more difficult it is for you to get a mortgage loan when compared to your salaried peers if you’re self-employed. Independent contractors and business owners have income that varies from month to month and year to year, which can make you a riskier candidate for a loan. This may result in mortgage lenders extending higher rates or approval criteria to self-employed buyers.
Luxury Mortgage’s Asset Qualifier loan program is perfect for business owners who have a large amount of income tied up in business assets. The Asset Qualifier loan may allow you to borrow up to $6 million using more personalized and flexible qualification criteria. You also won’t need to prove your income when you apply for your loan.
Step 3: Find a House
Once you’re approved for a mortgage loan, you can begin shopping for homes. You may want to hire a real estate agent or realtor at this point to make your home search easier.
Your preapproval letter will tell you how much money you can afford to take out in a loan, which can give you a great starting point when it comes to setting a budget. However, price is only one of many factors you should consider when you look for a house you might want to buy. Some other characteristics you should think about include:
- Square footage: The ideal square footage for your home may vary depending on whether you’re planning on sizing up or down.
- Number of bedrooms and bathrooms: If you have children or you plan to have children, you might want to consider how many bedrooms and bathrooms you’ll need before you begin shopping for a home.
- Appliances included with the sale: If you don’t already have a washer and dryer set, dishwasher or other appliance you plan on moving with you, you might want to look for a home with these appliances included in the sale.
- Local property taxes: The neighborhood where you buy your home will determine the amount you pay in property taxes.
- School districts: The area where you buy your home will also determine which schools your children attend. If you have children or you plan to start a family in the future, be sure to research local school districts and ratings.
- Home condition: Unless you’re buying a newly constructed property, your home probably won’t be in picture-perfect condition when you move in. Decide how much time and money you’re willing to spend on renovations and repairs.
It’s a good idea to make a list of wants and needs for your new home. After you find a property that fits your needs and is priced within your budget, it’s time to submit an offer.
Step 4: Make an Offer
Once you find a home that you want to buy, it’s time to submit an offer letter. An offer letter is a written agreement that tells a seller that you’re serious about buying their property. Your offer letter is usually written by your real estate agent and includes details like the price you’re offering for the home, any contingencies you need before the sale goes through and your personal contact information. Your offer letter usually also includes an earnest money deposit, which goes toward your down payment if the seller accepts your offer.
After you submit your offer letter, you must wait for the seller to respond. The seller might accept your offer on the first submission, which means that you can move to close your loan. The seller can also reject your offer or create a counteroffer with new terms. If this is the case, work together with your agent to decide whether you want to negotiate further or explore other property options.
Step 5: Closing Time
After you and your seller reach a mutually agreeable set of sales terms, you can finally close on your mortgage loan. Most lenders’ closing processes include 3 parts:
- Appraisal: An appraisal is a professional estimate of what your property is worth. An appraiser will visit your property, take a look around the home and examine recent sales data before assigning an official estimated value to your property. Appraisals are required before you buy a home with a mortgage loan because lenders cannot loan out more money than your property is worth.
- Inspection: During an inspection, a home condition expert will walk through your property and test its systems and appliances. At the conclusion of your inspection, you’ll receive a report that tells you everything that the inspector found wrong with the property. Most lenders don’t require that you get an inspection before you buy a home, but you still should, as an inspection ensures that you aren’t overspending on a home with major damage.
- Underwriting: While you receive a home inspection and appraisal, your lender will work on underwriting your loan. During underwriting, your lender will check your credit report, verify your assets and prepare your new loan paperwork.
After all closing steps are completed, you’ll attend a closing meeting to sign off on your new loan. Remember to bring a cashier’s check or proof of electronic fund transfer to your closing meeting, along with your ID and the contact information for your real estate agent.
Move-in Day in Michigan
When you walk away from closing, you’re officially a homeowner! Owning your home isn’t only about decorating and making your mortgage payments on schedule. As a property owner, you also need to be mindful of insurance payments, ongoing maintenance expenses and property taxes. Keeping yourself organized and ensuring that you have set aside enough money for the regular expenses that come with owning a home will help you stay on-track toward owning your home.