Michigan is a great place to buy a house because of its low cost of living and the strong job market. Nearly 74% of people living in Michigan own a house. The average price of a house in Michigan is around $222,660. The pride in owning a home is the most significant reason people buy a house. Families purchase a home using cash, conventional, VA or FHA loans. FHA loans are better than conventional loans because they require a lower credit score and minimum down payment. They are designed for people who are not eligible for conventional loans. An FHA loan in Michigan enables many families to own a home. Families feel a sense of security when they live in their own house.
Types of loans for home buyers
Conventional loans are ideal for people with good credit scores. However, this loan is not backed by the federal government. Two types of conventional loans are conforming loans and non-conforming loans. Conforming loans follow a set of rules mentioned by the Federal Housing Finance Agency(FHFA). Non-conforming loans need not follow the FHFA standards.
Conventional loans are available to buy a primary or second home or investment property. However, the interest rates for this loan are slightly high. Therefore, people who can afford to make a substantial down payment choose this loan.
Jumbo loans do not come under the FHFA limits. The loans are common in areas where the costs of homes are high. The prices of homes exceed the conforming loan limits. The most significant benefit of a jumbo loan is that people can borrow more money to buy an expensive home. The interest rates are high when compared to other loans. This loan is ideal for people who want to borrow considerable money.
Government plays a role in helping people to buy a home. Government agencies like the Federal Housing Administration, U.S Department of Veterans Affairs and U.S Department of Agriculture back mortgages.
FHA loans help people borrow money without a large down payment. Borrowers get up to 96.5% financing and need to make a 3.5% down payment.
USDA loans are for moderate to low-income people. It helps them to buy homes in rural areas, but people can purchase homes only in USDA-eligible areas. In addition, some USDA loans don’t need a down payment from the borrowers.
VA loans are flexible loans available for U.S military members and their families. They do not need a downpayment or minimum credit score. Instead, they have a funding fee paid upfront or rolled into the loan amount.
Government loans do not require substantial down payments, and the credit requirements are relaxed. As a result, they help people who don’t qualify for a conventional loan.
Fixed-rate mortgages have the same interest rate during the loan’s entire life. The monthly mortgage payment remains the same. People availing of this loan can more precisely budget their expenses every month. Families planning to stay in the same house for five to seven years can avail of a fixed-rate mortgage.
Adjustable-rate mortgages have a fluctuating interest rate that goes up and down according to the market conditions. The rate is lower in the first few years of owning a new home. The loan helps people save a substantial amount of money. Families planning to stay in a house only for a few years benefit from this mortgage.
An FHA loan in Michigan benefits many families and helps them purchase a house. They are affordable, and credit qualifications are not as strict as conventional loans. And loans allow people to fulfill their dreams of owning a home.