Buying a House in Michigan
Are you thinking about buying a house in Michigan? Deciding to buy a house, especially for the first time, can be a very intimidating process! So much to think about and to plan out. So many questions to have answered.
One frequently asked question is what exactly do I have to pay to buy a house? Fortunately, most of the cost of selling and transferring the property is paid for by the seller. As a buyer, the bulk of your costs are pro-rated reimbursements and mortgage costs.
Your lender can give you a closing cost estimate based on the purchase price and probable taxes for the area you are looking.
You can ask them for this with your pre-approval.
In Michigan, We pay our property taxes in advance. You have your city & county taxes, one due July 1st each year covering July 1 – June 30th the following year, and one due December 1st covering December 1st – Nov 30th of the following year. Because of this, when you close on a house you must reimburse the seller for the taxes they’ve already paid. The title company pro-rates the taxes by computing the daily rate, and then multiplies it by the number of days you will own the home, to calculate how much you will owe the seller at closing.
In cities where you pre-pay for things like garbage collection, this will also be prorated like Taxes so that you pay for the days you own the property, and the seller pays for the days they own the property.
If you are purchasing a condo or house with association fee, this is another item that will be prorated at closing since it is typically paid in advance. You will pay for the days you will own the condo and the seller pays for the days they will.
As a buyer, you pay a closing fee to the title company to prepare paperwork and close the transaction. This fee is typically $450-$550, maybe a little less if it is a cash purchase.
Buyers Agent Transaction Fee
Your agent will be paid their commission through the seller on a traditional listing. Most buyers brokers charge a small transaction fee which covers the storage or your transaction documents so that a copy will always be available should you need it. Our fee is $325.
Lenders Title Insurance
While the seller is responsible for owners title insurance which protects you against any undetected defects in title, your lender will also require you purchase a policy of title insurance to protect the loan they are giving you. Lenders title insurance costs are based on the purchase price.
As a buyer, you pay the costs to records your new deed and new mortgage if applicable. The cost from the County is per page and is usually about $100 for a deed & mortgage.
Your largest expense closing cost wise will be your mortgage costs. These cost fluctuate based on your credit, your purchase price, the type of loan, etc. So this is something you have to speak with a loan office for, to go over your specific situation. That’s why, the first step in the home buying process is always to get pre-approved. Then you know exactly where you stand, and how much money you can expect to need at closing.
Your down payment is typically your largest expense. Unless you qualify for a VA loan your down payment will range from 1% to 20% depending on the loan type you go with
Most loan programs allow you to roll your closing costs into you mortgage so long as the properties appraisal value allows enough equity to do so, which is a great option if you are hoping to keep some cash in the bank to do property repairs and cosmetic upgrades. In many situations, buyers are able to come to the closing table only having to pay their down payment, with the rest of their closing costs financed!
If you have any questions about the buying process or are ready to start looking, feel free to contact me at anything. For a home buyers outline please visit my Michigan Buyers Resource Center and if you would like to get set up on a MLS property search — Click the Find My Dream Home tag on my website.
OTHER HOME BUYING ARTICLES
HOW TO: The Perfect Home Search