Michigan mortages and deciding how much money you need

If you are a Michigan first time home buyer you are probably wondering what type of Michigan mortgage you should get?  One of the easiest ways to determine what mortgage to get boils down to how much money do you have?

Let me break down some of the Michigan mortgage costs that you will incur when you get to the closing table on your Metro Detroit home.

Mortgage closing costs usually range from about $2200 – $2500

Tax pro-ration explanation and escrow explanation.  Tax pro-rations and escrow costs are one full year of the property taxes.  So if the winter and summer taxes are $3500 then you will need $3500 to cover tax pro-rations and escrows.

Down payment is based on what you can afford.  Your choices are usually 3 1/2%, 10%, then any where from 10 to 20%.

For our explanation today let’s say the house is $100,000, the taxes are $3000, and your are doing a FHA loan that requires a 3 1/2% down payment.   So let’s use:

$2200 closing costs

$3000  one year property taxes

$3500  FHA  3.5% down payment

$8700 total closing costs needed

The minimum you can come to the closing table with is 3 1/2% of the purchase price.   So in the case above you would need is $3500.  Even that money can be a gift from a family member.  The rest of the money can come from seller concessions.  Seller’s concessions explanation.

Don’t get discouraged if you don’t have enough money yet to buy a home, give me a call, I will sit down and help you plan to buy your Metro Detroit home.

Russ Ravary

 

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