Mortgage Rates Michigan: Navigating A High-Demand Market
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Between low housing inventory and historic low mortgage interest rates, the Michigan housing market is booming. As a homebuyer, you need to be prepared for serious competition. If you’re looking to call the State of Michigan home, it’s best to plan your purchase soon. As the first step, you should know the local mortgage and refinance rates.
In this guide, we’ll cover everything you need to know about the mortgage rates in Michigan. We provide access to a constantly updated Michigan mortgage rate & APR table and share tips to ensure your home buying journey goes smoothly.
Mortgage Options In Michigan
Most American home buyers have the choice between three types of mortgage products. Each kind of loan has its pros and cons. In this section, we break down these loan products.
Conventional Home Loan Products
Conventional home loans are offered mainly by banks and other private lenders. These products adhere to loan amount limits set by the Federal Housing Finance Agency (FHFA). Conforming loan limits differ by area – for the entire state of Michigan, conforming mortgage loans are limited to $548,250.
In this type of mortgage loan, your interest rate & APR remains constant for its entire life. Because these rates stay the same regardless of market conditions, your monthly payments won’t change. The stability and predictability offered by fixed-rate mortgages make them popular with new home buyers.
Usually, fixed-rate mortgages are offered in 30-year loan terms. However, if you want lower rates, you can take a 15-year or 20-year loan. Keep in mind that while their rates are lower, they also have higher monthly payments.
Adjustable-Rate Mortgage (ARM)
An ARM’s rate readjusts periodically. This annual ARM rate & APR adjustment is based on the performance of a market index chosen by the lender. Before the ARM enters its adjustable period, however, it has an introductory period that features fixed mortgage interest rates. Due to the lower rates & APR on these introductory periods, ARMs are popular for those who see short-term savings.
Typically, the fixed-rate introductory period lasts five years. However, this period can last anywhere between three to ten years.
If you’re looking to buy a home priced above lending limits, you can opt for a jumbo mortgage from your lender. A jumbo allows you to exceed loan amount limits with the caveat of a higher rate & APR.
Government-Backed Loan Products
Several federal government bodies offer loan programs for certain demographics. If you qualify for these mortgages, you can enjoy affordable rates and low down payment requirements.
The three major types of government home loans are:
FHA loans: This loan type offers you low rates and a low credit rating requirement. However, you also need to pay for private mortgage insurance (PMI) fees for the entire loan.
USDA loans: To qualify for a USDA loan, you need to buy a home in a designated rural area. These mortgages offer no down payment requirements and reduced PMI fees.
VA loans: These mortgages are exclusively available to military members. If you qualify for this loan, you’ll receive a zero-down loan with waived PMI fees. However, you’re required to pay a cost called funding fees at the start of the loan.
In a refinance, you take out a new mortgage to pay off your previous one. Typically, you refinance loans to modify your loan type or take advantage of falling refinance rates.
There are two types of refinance loans:
Rate and term refinance: This kind of refinance allows you to modify your mortgage loan terms. You can use this to attain lower rates by shortening your loan term or avoid unpredictable rates by shifting your ARM into a fixed-rate.
Cash-out refinance: With this loan, you can convert accrued home equity into cash. Cash-out refinances work by providing you a loan larger than your current mortgage balance, where any leftover money can be used for other things.
Current Michigan Mortgage Rates
In the past few years, average mortgage rates & APR in Michigan are relatively equal or slightly higher than the national average. Here, we provide the latest Michigan mortgage rates & APR. This data is taken from America’s major mortgage lenders and will be updated daily.
Today’s Mortgage Rates in Michigan
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Your mortgage and refinance rates may vary depending on your financial condition. The mortgage rate & APR details on this table may change without prior notice.
Looking for a way to see personalized Michigan mortgage rates? Input your financial details into the tool at the top of this page, and we’ll calculate a customized Michigan rate & APR estimate for you!
First-Time Homebuyer Programs In Michigan
To boost the homeownership rate among new buyers, the State of Michigan offers several loan and down payment assistance programs. To qualify for these Michigan State Housing Development Authority (MSHDA) programs, you need to fulfill these conditions:
Provide a 3% down payment
Contribute 1% of the loan amount
Fulfill credit score requirements
Meet income limits set by the MSHDA
Complete a homeowner education course
Purchase a single-family home valued under $224,500
MI Home Loan
This state program provides 30-year fixed-rate mortgages for lower-income first-time homebuyers. One caveat of the MI Home Loan is that your entire household must apply and qualify for these loans.
MI Home Loan Flex
The Home Loan Flex program offers some leniencies compared to its counterpart. Both first-time and repeat buyers are eligible, and you only need one person to qualify for the mortgage. However, it features a higher credit score requirement.
MSHDA Down Payment Assistance
Participants of both MI Home programs can apply for this down payment assistance. You’ll receive up to $7,500 to cover your closing cost, down payment, and lender fees in the form of loans with a 0% interest rate. These loans only need to be repaid when your home is sold, refinanced, or paid in full.
Buying A Home In Michigan
It’s not enough to know what you need to buy a home – you need to know how to do it. To help you along the process, we’ve compiled this guide!
Qualify For A Loan
The first thing you should do is get pre-approved for a loan. Be sure to compare between several lenders to find the best offer. All lenders are required to give loan estimate documents that contain key details about your mortgage – including its rates, fees, and terms. You can use them as a comparison tool to find the best lender for you.
To get pre-approved, you can apply for a mortgage from a lender. Once the loan officer finishes your financial inspection, you’ll receive the letter.
This letter contains key details about your mortgage – which covers your maximum loan amount, terms, interest rate, fees, and monthly payment amount.
Find A Real Estate Agent
Enlisting the services of a real estate agent can help make the homebuying process easier. A good real estate agent can leverage their local expertise for you. Good agents won’t only show you homes – they can inform you on key local details like the average property value, important amenities, and commute times.
Start House Hunting
The right neighborhood is just as important as the right house. Start your hunt from the neighborhood and search local listings. A good rule of thumb is to find the most affordable home that fits your criteria. Any money left over after the purchase transaction can be used for home improvements.
Make A Purchase Offer
When you make an offer, you need to remember that you may have competition. A good way to beat out other potential buyers is to make your offer stand out. Ask your real estate agent for advice on how much above the listed price you should offer.
Schedule Inspections And Appraisals
As a buyer, checking your purchase is essential. Home inspectors can spot any issues in your home, while an appraisal helps you determine the real value of the home. Be sure to schedule your inspection and appraisal before choosing a close date.
Close The Purchase
Make sure you have money to pay the closing cost and lender fees ready before closing day. On the day itself, work with your real estate agent to sign all the paperwork needed. Once all the paperwork is done, the home is officially yours!
How To Get A Better Mortgage Rate In Michigan
Taking a few percentage points off your mortgage rate & APR can save you thousands of dollars. To help you attain the best savings, here are our three top tips!
Purchase Discount Points
Your lender may offer discount points as a way to reduce your interest rates & APR. These points trade an upfront cost for a reduced rate. Typically, points are worth 1% of the loan each and reduce your rate by 0.25%. If you buy two points on a $300,000 loan with a 4% rate, you’ll pay $6,000 to reduce your rate to 3.5%.
Since the upfront costs can be expensive, discount points are best bought to get long-term savings.
Work With Mortgage Brokers
An independent mortgage broker’s services can help do the legwork of comparing lenders and finding the best rates & APR. With their experience, they may find offers that you couldn’t find otherwise. Moreover, having a broker assisting your search frees you up to work on other parts of the homebuying process.
Pay More Down Payment
A larger down allows you to save in multiple ways. Paying the required 20% helps you avoid PMI fees and gives you a lower loan balance to pay off. Increasing your down also convinces the lender to lower your rates & APR.
Low supply and high demand makes the Michigan housing market very competitive. However, knowing the local mortgage rates and ways to make a good offer can give you an advantage.
If you’re looking to find the best mortgage for your Michigan home, Wesley LLC is here to help. Contact our professional team for mortgage assistance and consultations today!