Michigan offers gorgeous natural surroundings with options for rural and urban living. If you’re planning to buy or refinance a Michigan home, it’s essential to know what mortgage rates you might expect.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.907% | 6.991% |
| 15-year fixed | 6.286% | 6.422% |
| 7/1 ARM (adjustable rate) | 6.921% | 7.653% |
| 5/1 ARM (adjustable rate) | 6.722% | 7.722% |
Best Mortgage Lenders in Michigan
Benzinga has thoroughly researched the top lenders in to provide this list of best mortgage companies in Michigan.
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What Is a Mortgage Rate?
You might be aware that mortgages are loans you use to purchase a home. Lenders need to make a profit when they loan money, and the way they do that is to charge interest. Your mortgage rate is the interest rate you pay on your mortgage.
Some mortgages have fixed interest rates, which remain the same for the term of the loan. Other mortgages have adjustable rates, which change periodically. Your mortgage lender will help you learn more about mortgage rate options and help you decide whether a fixed or adjustable rate is best for you.
What Factors Impact Your Mortgage Rate?
The mortgage rates Michigan homeowners can expect depend on several factors. You can control some of these factors, such as your credit history. Other factors may impact which type of mortgage you choose, such as your loan term.
Your Credit History
Lenders look at your credit history to determine how risky it is to lend you money. If you have accounts in collections because you haven’t paid your bills, lenders might charge you a higher interest rate since you’ve missed payments in the past.
Your Down Payment
Your down payment is how much you pay on the home when you purchase it. A higher down payment means you need to borrow less, and that’s less of a risk to the lender. Lenders may offer you a lower interest rate if you make a down payment of 20% or more, according to the Consumer Financial Protection Bureau.
Your Loan Term
Your loan term is how long your loan will last. Shorter loan terms typically have lower interest rates.
Whether You Purchase Points
Points offer you a discount on your mortgage if you pay a fee upfront. One point equals 1% of your mortgage. Your lender might offer you a discount on your mortgage rate for paying points. Let’s say your interest rate is 3.75%. Your lender might offer a discount of 0.25% for each point you purchase. Let’s say you pay 2 points, or 2% of the total amount of your mortgage. Your interest rate would be 3.25% instead of 3.75%.
It’s essential to shop around since each lender will view these factors differently. Get multiple purchase quotes or refinance quotes and compare each quote carefully.
What Is a Mortgage Type?
Your mortgage type refers to what type of loan you’re being given to purchase or refinance your home. Some mortgages are insured by the government, for example. Those loans may have limits on how much you can borrow or where you can purchase a home.
Conventional Loans
A conventional mortgage is a home loan that is not backed by the federal government. Conventional mortgages can be used for a wider variety of purchases and refinances than government-backed mortgages. You can typically only use government-back loans for primary residences, for example. You can use conventional mortgages for investment properties and second homes as well as primary homes.
FHA Loans
The Federal Housing Administration backs FHA mortgages. The mortgages are available to borrowers with credit scores as low as 500. If you have a credit score of less than 580, you’ll need to make a down payment of 10%. Otherwise, you can make a down payment with as little as 3.5%.
USDA Loans
The United States Department of Agriculture backs USDA mortgages. Low- to moderate-income homebuyers may qualify for a USDA mortgage to purchase a home in a rural area. This is an excellent option for Michigan homebuyers because the state is heavily rural. You can see if prospective homes are eligible using the USDA eligibility map.
VA Loans
The Veterans Administration backs home loans for veterans, as well as spouses and dependents of active-duty service members. You may be able to purchase a home with no down payment if you meet VA eligibility requirements.
The government doesn’t directly offer loans through the FHA, USDA or VA. Private lenders that are approved by the appropriate agency offer these mortgages. The government insures these mortgages, which means that if you don’t repay the loan, the lender doesn’t lose its money.
What Is a Mortgage Term?
Your mortgage term is how long the mortgage will last. You make payments for the mortgage term, and at the end of the term, you pay off your mortgage and own your home.
Here are common mortgage terms.
30-Year Fixed
A 30-year fixed mortgage offers you the same interest rate (and the same monthly payment) for 30 years.
15-year fixed
A 15-year fixed mortgage has the same interest rate for 15 years. Your monthly payment stays the same as well. Since the term is shorter, 15-year mortgages typically have a higher monthly payment than a 30-year mortgage but have lower interest rates.
5/1 ARM
ARM stands for an adjustable-rate mortgage. A 5/1 ARM means your mortgage has a fixed rate for the first 5 years. The interest rate will adjust once per year after the initial fixed term. The rate may go up or down. ARMs typically have a lower initial rate than fixed-rate mortgages. Once the adjustment period starts, your interest rate could be higher than a fixed-rate mortgage.
Current Mortgage Rates in Michigan
Mortgage rates change daily. The frequent changes are due to economic factors. Inflation, which is the tendency of items to cost more over time, impacts interest rates. Economic growth, including the unemployment rate, also impacts inflation.
Benzinga updates mortgage rates frequently to reflect the most relevant data.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.907% | 6.991% |
| 15-year fixed | 6.286% | 6.422% |
| 7/1 ARM (adjustable rate) | 6.921% | 7.653% |
| 5/1 ARM (adjustable rate) | 6.722% | 7.722% |
Calculating Interest in Michigan
Lenders calculate your interest rate each month. When you make your monthly mortgage payment, part of it goes to pay down the balance and part of it goes to pay interest. As you pay each month, your balance goes lower and less interest accumulates. As time goes on, more of your monthly payment goes to the balance and less goes to interest until your mortgage is paid off.
The interest is the same for the loan term in a fixed-rate mortgage. Your interest rate will change according to a schedule set by your lender with an adjustable-rate mortgage. This means your monthly payments will change as well.
Here is a look at how much you might pay in interest for a Michigan home.
| City | Average Home Value | Loan Term | Current Rate | Downpayment (20%) | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|---|---|
| Detroit | $45,200 | 30-year fixed | 0% | $9,040 | $0.00 | -$36,160.00 |
| Grand Rapids | $162,400 | 30-year fixed | 6.406% | $32,480 | $813.17 | $162,821.20 |
| Lansing | $89,100 | 30-year fixed | 0% | $17,820 | $0.00 | -$71,280.00 |
| Ann Arbor | $375,100 | 30-year fixed | 6.809% | $75,020 | $1,958.10 | $404,836.00 |
Lender Credit Score Minimums in Michigan
Your credit score is a 3-digit number that lenders use to decide on your interest rate. Credit scoring companies base your score on your payment history, how long you’ve had your credit accounts and your credit use. You need to meet the minimum credit score requirements to work with most lenders.
| Lender | Minimum Credit Score Required |
|---|---|
| Bank of America | 620 |
| BNC National Bank | 620 |
| Chase | 620 |
| Rocket Mortgage® | 620 |
| USAA | 620 |
Get a Michigan Mortgage
Michigan has a lot to offer besides the Great Lakes, rich forests and urban living. Michigan also offers a robust homebuyer assistance program through the Michigan State Housing Development Authority. First time homebuyers who meet income and credit requirements may be able to qualify for down payment assistance. Repeat homebuyers might be able to qualify if you purchase a home in a targeted area.
Frequently Asked Questions
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
Get Ready for Take Off
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You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.