Mortgage and Refinance Rates in Michigan

Today's Rates In Michigan

Like the weather in Michigan, mortgage rates can change quickly. One day they're up, one day they're down. One day it's sunny and warm, the next you're got white flakes whizzing through the air – in May. Either way, you need to ready for sudden changes if you're planning to buy or refinance a home in Michigan.

Current mortgage rates for some of the most popular home loans used in Michigan are listed above. That's a good starting point to know about what you can expect to pay for Michigan home loans. But not all mortgage lenders will charge the same rate and the rates that individual borrowers pay will vary depending on their credit score and other factors.

All of which makes it important to shop around if you want to find the best mortgage rates in Michigan. So where to get started?

Finding the best Michigan mortgage rates

The key thing is to check directly with lenders offering home loans in Michigan and see what rates they'll offer someone with your credit and financial profile. This is called getting prequalified and is the first step in mortgage shopping. A later, more formal step is getting preapproved, which is when a lender gives you a letter stating they are willing to lend you up to a certain amount, which you can show to homesellers as evidence you can obtain a mortgage.

You want to check with at least 3-5 lenders to see what mortgage rates they'll offer someone in Michigan with your borrower profile. You can call around individually, or you can also obtain rate quotes from multiple borrowers all at once by using a rate request form such as the one at the top of this page. Or you can do both.

Before you start shopping around though, you need to consider what your loan options are. Borrowers have a choice of several types of home loans in Michigan and the mortgage rates charged will often vary among them.

Here's a look at some of the most popular.

FHA loans – Michigan

FHA loan requirements make them a good choice for first-time homebuyers in Michigan and elsewhere. With low down payments allowed – as little as 3.5 percent – Michigan first-time homebuyers can qualify even if they don't have a lot of savings.

They're also a good choice for borrowers with weaker or flawed credit in Michigan. FHA loans typically offer better mortgage rates to borrowers with less-than-perfect credit than conventional mortgages do, making them attractive to borrowers who are just establishing credit or who have a few negative items on their credit report.

There's no official minimum credit score in FHA loan requirements, so theoretically you can get an FHA loan in Michigan regardless of your score. However, individual FHA lenders set their own limits, however, so in practice you may have to hunt around for someone who will approve an FHA loan in Michigan with a credit score below 620-600. The FHA down payment requirement also increases to 10 percent for borrowers with credit scores below 580.

Michigan borrowers with good to excellent credit scores will likely get the best combination of a low rate and fees with a conventional mortgage backed by Fannie Mae or Freddie Mac, which are the most common type of mortgage in Michigan and the rest of the country. Down payments of as little as 3 percent are allowed, but you can get a better rate by putting down more.

Putting down 20 percent or more will allow you to avoid paying for private mortgage insurance (PMI), which can add an annual cost of an additional one-half to one percent of your loan amount to your mortgage payments. You can cancel PMI on Michigan home loans once you reach 20 percent equity on a conventional loan, although with an FHA loan you need to carry it for the life of the loan if you put down less than 10 percent.

For qualified veterans and active duty members of the military, VA loans offer attractive mortgage credits, flexible credit requirements and require no down payment in most cases, up to fairly generous lending limits.

Refinance rates in Michigan

There's really no different between refinance rates and other mortgage rates in Michigan. It doesn't matter if you're buying a home or refinancing it – the mortgage rate you get should be the same, assuming the key elements of the loan are the same – your credit score, debt-to-income ratio, discount points paid, etc.

The big difference between a mortgage to buy a home and a home loan refinance is that in a refinance, your home equity takes the place of your down payment in a purchase. Twenty percent down in a purchase is equal to 20 percent home equity in a refinance. Of course, because people have usually had a number of years to build up equity before refinancing, their home equity at refinancing usually exceeds the down payment they made when purchasing, so they can get better terms the second time around.

Home equity loans in Michigan

Another type of Michigan home loan has nothing to do with buying or refinancing a home. It's when you borrow against your home's value to obtain money for home improvements or some other purpose.

Because they are second liens – in the event of default, they only get paid off after the primary mortgage on your home – home equity loan rates run higher than Michigan mortgage rates used to purchase or refinance a home. But they're still lower than what you'd expect to pay on a credit card or other unsecured loan, which makes them an attractive option to borrow needed funds.

Michigan home equity loans come in two main types, with different rates. In a standard home equity loan, you receive a lump sum of cash and repay it on a monthly schedule. A home equity line of credit (HELOC), allows you to borrow up to a certain amount as needed and make interest-only payments if you wish for a certain number of years. This allows you a certain financial flexibility.

Standard home equity loan rates are usually fixed, while Michigan HELOC rates are always adjustable during the draw period before you have to start repaying principle. The standard home equity loan rates will therefore start out higher than HELOC rates, but the HELOC rates are more unpredictable.

These are set up as adjustable-rate loans during what is called the "draw" period before you have to begin repaying principle and offer a degree of financial flexibility that standard home equity loans do not have.