What is a mortgage?
Very quickly, a mortgage is a loan you receive to purchase real property. Real estate is expensive, and typically the largest purchase many people will ever make. So, finding a great mortgage to fit your financial needs is crucial. Mortgages lenders are not one size fits all. There are many different loan types, lending institutions, and fees to be aware of. Below I will walk you through some of the basics to help you get started.
Mortgage types in Michigan
Mortgage rates in michigan vary
There are a variety of mortgage options in Michigan, so knowing the basics of each type of loan will help you decide which ones to pursue. Of course, you’ll want to speak with a licensed mortgage broker to get specific details.
The loan types you’ll most often hear or are conventional, FHA, VA and USDA. This is because they are offered in every state. Another loan you’ll see here in Michigan is the MSHDA loan. Click the images to learn more about each specific type
Conventional loans are the most common loans for mortgages. You’re typically going to find the best current mortgage rates in Michigan on these loans. There are a few different types of conventional loans with different down payment options. The standard conventional loan typically requires 20% down payment. Some conventional loans can be done with as little as 5% down. Again, conventional Michigan mortgage rates are typically the lowest offered and help you get the best monthly payment. However, first time home buyers typically don’t have enough savings to attain the down payment requirements. Conventional loans generally don’t have a private mortgage insurance requirement as well.
FHA loans are another solution on how to get a mortgage. They are very common due to their reduced down payment and lower credit score requirements. Many first time home buyers often opt for an FHA loan to purchase their home. An FHA loan does have more restrictions on the quality and structural security of a home as well. Downsides to an FHA loan include, private mortgage insurance, higher interest rates, and generally take longer to close. For more info on FHA loans click here.
If you qualify for a VA loan, first and foremost, thank you for your service! This loan is reserved for our best and bravest. Veterans who have earned this loan option benefit from lower rates, zero downpayment, lower closing costs and no private mortgage insurance. This is an outstanding option for veterans! See if you can get approved for a VA loan today!
USDA loans are great for zero down payment and generally lower rates. Also the mortgage insurance is typically lower than on an FHA loan.
There are a few restrictions for how to get a mortgage with a USDA loan. The primary restriction is the location of the home you’re wanting to purchase. It is a government backed loan, so it has similar requirements to an FHA loan. However, the home needs to be in a rural location approved by the USDA guidelines to qualify for the loan. Click here to see a map of USDA areas.
The map doesn’t 100% qualify the home, so be sure to speak with your Realtor and lender for full approval.
Wondering how to get a home loan for first time home buyers? The MSHDA home loan program is a wonderful home loan for first time home buyers in Michigan. Also for repeat home buyers in certain locations. The MSHDA home loan will provide up to $7,500 in down payment assistance!
There are some requirements to obtain a MSHDA home loan. These requirements are not difficult to meet, but do limit some from using this loan type. MSHDA loans also don’t typically offer the lowest current mortgage rates in Michigan. However, the Michigan mortgage rates offered will be competitive with other loan options when considering the down payment assistance.
Jumbo home loans are exactly how they sound. They are large loans for more expensive properties. Luxury, investment, and multi-unit properties are some that may use a Jumbo loan to purchase. These home loans require higher credit scores, but allow borrowers to borrow funds over $480,000 in most area’s of the country. Mortgage rates in Michigan for Jumbo loans are usually a little lower than standard conventional rates. If you’re curious about how to get a mortgage under a Jumbo loan, click here to speak with a lender.
There are many lenders out there who can help you with a home loan. Banks, credit unions, independent brokers, mortgage companies, and even the seller’s of the home can help secure funding for a mortgage.
There are so many variables to this question it’s impossible to give a definite answer. Most home loans take anywhere from 12 – 60 days to complete. Of course, each lender is different and each buyer’s situation will affect loan completion time.
A few terms to look up and know when speaking to a lender about a mortgage are: Interest rate, DTI, loan to value, origination fee, closing costs, down payment, and PMI (private mortgage insurance).
Again, everybody’s situation is different, but you will need to have some savings to buy a home. You can have this money in a bank account, retirement account like a 401k, or gift money from an immediate relative. Generally, you’d want to have your down payment money saved, closing costs, and a few months mortgage payments. On average you should have $10,000 – $25,000 set aside for your purchase. However, there are loan programs to help with down payment and closing costs if you don’t quite have that much in savings.
It’s not a requirement to be prequalified to look at homes. However, most Realtors would prefer you to have a pre qualification letter from a lender prior to submitting an offer. If you’re looking for a land contract (seller financing) you’ll want to have your financial documents ready for them to review.
To get a mortgage, you’ll need to provide documents to prove your income. Bank statements and paychecks will suffice. You’ll also need your tax returns for the two most recent years, legal identification, renting history, and other supporting documents. Your lender will let you know what is needed after you fill out the application.
general questions on how to get a mortgage.
Still have questions?
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Please contact us with any questions you may have on how to get a mortgage. Although we have relationships with a few lenders linked on this page, you are not required to use any of them. It is your choice as the buyer who you use for financing your new property.