Buying a house is so exciting. It is such a meaningful decision that has far-reaching considerations and impact. Everything from your local economy, your personal financials to Michigan's varied housing market can affect what home you buy, how much it costs, and how it will continue to be your favorite place far into the future.
Speaking of the future, let's take a quick glance at what the market currently looks like and what experts say the future may hold.
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Neutral market: Michigan housing market is currently considered to be neutral. This means home inventory is unchanged when compared to previous months/years. Homes are selling at prices close to their active listing rates, and median sales prices are flat.
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Property values are expected to rise: If everything stays relatively the same in the state, Michigan home values are expected to rise 8.2% this year.
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Mortgage rates are low: In Michigan, 30-year mortgage rates average 2.93%, lower than the 3.99% US average. These rates are expected to hold through the near future.
Table of contents:
- Prepare today for your house-hunt tomorrow
- Your mortgage payment
- Other expenses
- Programs to help homeowners
- Shop 'til you drop
- Congratulations, Homeowner
- Staying positively proactive
Prepare today for your house-hunt tomorrow
Taking the time to work out all the numbers you will need to know as you go into your dream home hunt is worth its weight in gold. Educating yourself on what these numbers mean and how you and your mortgage lender use them will make financing your new home much easier.
Numbers to know include:
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Credit score: While there are low-credit loans, for most conventional loans, you'll need a score of at least 620. There is no need to worry if your credit score is lower than that; there are ways to raise it.
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Debt-to-income ratio: Sit down and work out your debt-to-income ratio. It sounds more complicated than it is. A quick calculation is all it takes. Experts advise spending less than 36% of your income on debt (including your future mortgage payment) each month.
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Down payment: For a conventional loan, a 20% down payment is standard, but some lenders allow as low as 3%.
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Closing costs: First-time homebuyers can be shocked at the cost to close escrow on their new home. It is typical to pay 2-5% of the home's cost for closing. In Michigan, the average home value is $186,144, which equals $3,723-9,307 in closing costs. These costs are typically paid out of pocket, so budgeting for it ahead of shopping for your future home is a good idea.
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Homeownership costs: Owning a home means maintaining it. In Michigan, the average homeowner spends approximately $2,065 a year in maintenance costs. This figure is, of course subjective, but in general, saving 1% of the house's value each year for repairs is an excellent habit to get into.
Your mortgage payment
When preparing for your mortgage payment, it's crucial to know your finances and what a lender looks for when approving mortgage loans.
Most lenders follow the 28/36 rule when deciding whether to approve your mortgage:
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Your total housing costs shouldn't exceed 28% of your monthly income. This includes your future mortgage.
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Monthly debt payments shouldn't total more than 36% of your monthly income, also called your debt-to-income ratio mentioned above.
The median monthly income in Michigan is currently $4,725 (based on Census data), so as an example, the calculation for a potential mortgage payment would be $4,725 x 28% = $1,323
And then there are your other expenses...
For people in the market, house-shopping and deciding exactly how much money they will have/need every month; it can be easy to forget about those every day "nickel & dime" expenses. Take a close look at your everyday expenses like the coffee shop, your streaming subscriptions, groceries, etc. Remember to include these in your financial planning to make sure you determine exactly how much you will have to cover a mortgage payment without squeezing your bank account too tight.
Programs to help homeowners
Michigan has a great reputation for its state-run programs for potential and existing homeowners. The US Department of Housing and Urban Development keeps an up-to-date, comprehensive list of programs that can be found here. The Michigan State Housing Development Authority is also a great resource for programs, and there is also the USDA and the VA for those who are eligible. These programs are meant for anyone and everyone that can use them. So do your homework on which programs you qualify for to save you money in the short-term and the long-run.
Shop 'til you drop
First things first, you will want to choose the right real estate agent. Establishing a genuine and trusting relationship with your agent is vital to ensure you are both working towards the same goal and that they have your best interest at heart. There is no need to rush as there are many realtor-fish-in-the-sea, and finding one that fits your personality and expectations will make all the hard work of home shopping worth it.
Once you find your ideal Michigan real estate agent, the touring can begin.
Touring homes is an exciting step. You are sure to see many houses that, at first sight, make you fall in love and push you to rush through the process, but it's essential to take your time to progress through all the necessary steps with your realtor to make sure the house is actually the right one for you. We have made it easy with downloadable checklists and insider tips.
‘To Whom it may Concern’
A new step in home buying is the letter to the seller. A letter to the seller is an opportunity to explain what it is about your dream home that you fell in love with. Writing this letter has gained in popularity in the past decade or so because they are known to put potential home buyers ahead of any competition that may also be interested.
Once you and the perfect real estate agent find your dream home, get started on a letter to the seller as soon as possible.
Congratulations, Homeowner
So you've officially closed and now own a home in Michigan. You can expertly point out exactly where you live on your hand (or on your second hand if you chose the life of a Yooper) and as a property owner, you have so many exciting things ahead of you. Planning your housewarming party, decorating, planning for new and old traditions, and deciding your accounting system to keep track of mortgage and insurance payments. A new home means you get to chose how you would like to handle all of your ongoing maintenance expenses and property taxes. Having a positive attitude about keeping yourself organized and ensuring that you have set up a saving system for the regular expenses that come with owning a home will help you stay on track and make owning your home an amazing experience.
Who is our home insurer again?
During the process of closing, you may not have taken enough time to read the fine print of your home insurance policy and aren’t quite sure it fits your specific needs.
There’s no time like the present. Knowing the basic insurance terms will help you understand when evaluating your policy to decide if you need to amend or switch carriers to make sure your modern home has complete home protection.
Michigan is a beautiful place surrounded by water with extreme winters that gets quite a bit of moisture in every season. The state also attracts outdoorsy-type people that happen to have tons of equipment for their hobbies to help keep them entertained throughout the year. Making sure your home and the items inside it, that you spent your hard-earned money on, are proactively protected is the perfect next step. Luckily, we offer home insurance in Michigan and Detroit to help you do just that.
What to include in a home inventory
Creating a total home inventory may sound challenging to pull off, but with today's technology, it is a breeze. In fact, you can take a quick video of your home or provide pictures for proof of what you own. To stay organized, there are a ton of great apps that make the process as pain-free as possible.
Michigan got style
Whether your style is more farmhouse or modern, Michigan has a reputation for setting trends without even realizing it. Like it did when the state brought Motown to the world, showing up in style is a Michigander thing.
There are many MI decor experts to check out for inspiration. A few of our favorites that come to mind are Kristin Thompson, owner and interior e-designer of Postbox Designs. She uses solid colors for impact, paired with whites and gold details for an updated but classic look. Or Cynthia Evans of Cynthia Evans Interiors, who isn't scared of mixing patterns, textures, and colors for the dream space.
It's also imperative to take your time decorating your first home, savor the experience and seek out the expert advice of those who have been there before, like the specialists at ApartmentTherapy.
Staying positively proactive
There is no better feeling than creating and living in a space that is truly your own. From the day you move, as you—and your family—grows, shifts, and changes, making memories and trends change, there will always be projects to tackle and improvements to be made.
Being a proactive homeowner means it is pertinent to keep an eye out for any small issues that may end up costing big bucks down the line—like a crack in the foundation or a drafty window. Besides the smart home kits that we send to our customers to notify them of potential water leaks and home security concerns, we also offer Hippo Home Care. This complimentary service provides homeowners with immediate guidance via phone or video. One of our Home Care Experts works with you to identify and troubleshoot any issue you have. If you need an in-home service or repair, we can recommend professional service providers in your area—an invaluable service, especially for first-time Michigan homeowners.
