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.
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The Best Mortgage Lenders in Michigan:
- Huntington National Bank: Best Overall
- Flagstar Bank: Best for Flexible Terms
- Rocket Mortgage: Best for Online-Only
- Bank of America: Best for First-Time Homebuyers
- USAA: Best for VA Loans
- Veterans United: Best for Military Families
- Luxury Mortgage: Best for Self-Employed
- The Best Mortgage Lenders in Michigan:
- What is a Mortgage Rate?
- What Factors Impact Your Mortgage Rate?
- What is a Mortgage Type?
- What is a Mortgage Term?
- Current Mortgage Rates in Michigan
- Calculating Interest in Michigan
- Lender Credit Score Minimums in Michigan
- 7 Best Mortgage Lenders in Michigan
- Get a Michigan Mortgage
- Frequently Asked Questions
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%.
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: 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: 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: 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: 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 they also have lower interest rates.
- 5/1 ARM: ARM stands for an adjustable-rate mortgage. A 5/1 ARM means that 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||Current Mortgage Rate|
|5/1 ARM (adjustable rate)||3.71%|
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||Monthly Payment||Total Interest Paid|
|Grand Rapids||$162,400||30-year fixed||3.74%||$751.18||$108,024.26|
|Ann Arbor||$375,100||30-year fixed||3.74%||$1,735.02||$249,506.77|
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|
7 Best Mortgage Lenders in Michigan
Here are the 5 best mortgage companies in Michigan. Benzinga has thoroughly researched all of these lenders.
1. Best Overall: Huntington National Bank
Huntington National Bank, a regional bank, is uniquely positioned to help you navigate the Michigan mortgage market.
You can easily meet with a person to find a mortgage that works for you.
You can also take advantage of its award-winning online tools to pay your mortgage each month. Huntington has branches throughout the state, including the Upper Peninsula.
2. Best for Flexible Terms: Flagstar Bank
Flagstar Bank is headquartered in Troy, Michigan. What sets Flagstar Bank apart is its flexible mortgage options.
It offers fixed-rate mortgages with terms as low as 8 years and adjustable-rate mortgages with 5-, 7- and 10-year terms.
Flagstar Bank also offers government-backed loans and specialty loans. You can complete applications online or by visiting a branch location.
3. Best for Online-Only: Rocket Mortgage
Rocket Mortgage offers a completely online experience.
Rocket Mortgage makes the mortgage process a snap, particularly if you don’t have time to go to a bank branch or even if you dread small talk.
It offers government-backed mortgages as well as conventional loans. Customers consistently praise Rocket Mortgage’s fast, smooth mortgage process.
4. Best for First-Time Homebuyers: Bank of America
Bank of America offers clear information on its website to help educate first-time homebuyers.
It also ranks as one of the best lenders for first-time homebuyers due to its conventional mortgage, the Affordable Loan Solution mortgage, which offers down payments as low as 3%.
Bank of America also offers government-backed mortgages and other conventional mortgage options. You can complete mortgage applications online.
5. Best for VA Loans: USAA
USAA exclusively serves current and former service members and their eligible family members. It also has a reputation for excellent customer service.
USAA can guide you through the process if you’re considering a VA loan.
You can’t complete the entire mortgage process online with USAA but you can prequalify through its website.
6. Veterans United: Best for Military Veterans
If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
7. Luxury Mortgage: Best for Self-Employed
Luxury Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. Luxury Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It’s also easier to get approved if you’re self-employed. Tax returns are not required and you’ll only need one year of self-employment income history and a minimum credit score of 580. Luxury Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
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
1) Q: 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!
2) Q: 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.
3) Q: 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.