Buying a home can be complicated, especially when going through the process for the first time. At Michigan Mutual, Inc., we are here to simplify the process and provide answers for your most common home buying questions.
How do I get pre-approved for a mortgage?
Mortgage pre-approval means you have received a loan commitment from your mortgage company, based on a review of your credit and finances before you have found a home. This helps you shop for houses within your price range, and shows sellers that you are qualified to buy their home.
Getting pre-approved for a mortgage is simple. You can complete a pre-approval application right now on our website. Once we receive your application through our secure online portal, we will contact you the following business day with a preliminary loan decision. It's that easy.
What happens once I am pre-approved?
You are ready to buy a home! We offer you a no cost pre-approval which gives you buying power in the market. If you have not already identified a realtor to work with, we can also connect you with some of the top realtors in your area who will go out of their way to help you find your dream home.
If your financial information changes after your pre-approval, it is very important to inform us right away since that may effect the amount or type of mortgage you can receive.
To apply for pre-approval, click here.
What will Michigan Mutual, Inc. look at when I apply for a mortgage?
Michigan Mutual, Inc. considers many factors in evaluating your loan application, but we typically focus on four areas:
- Income and Debt – Michigan Mutual, Inc. determines whether you can afford to make mortgage payments based on how much money you make and what bills you currently have to pay.
- Assets – Your assets help us to determine that you have enough money to cover the costs of buying a home and establish a track record of savings.
- Credit – Your history of making timely payments for other financial obligations will help us predict whether you will repay your mortgage.
- Property – The property is the home that you want to buy and it must have enough value to serve as collateral for the mortgage. The appraisal is done for your protection.
What if I've had credit problems?
Your credit history is only one factor in qualifying for a loan. Someone who consistently makes timely payments will have more financing options available than someone with credit concerns. In the event of serious credit issues, there is no better way to solve the problems than tackling them head on with the help of a professional.
What is the minimum down payment I can make on a home?
There is no standard minimum down payment required for buying a home. Many first-time buyers believe they must put down as much as 20% of a home’s purchase price. That may have been true in the past, but there are many mortgage options available to today’s homebuyers that require a minimal or no down payment.
What closing costs will I have to pay?
Closing costs vary based on a number of factors—including the mortgage type, purchase contract, and location—but they usually include the following:
- Mortgage fees – This is the only cost we have control over in your transaction. This is the origination or processing fee.
- Third-party fees – These include charges for services not provided by Michigan Mutual, Inc. such as settlement fees, appraisal fee, title insurance and others that may apply. Your loan officer will go over these with you in detail.
- Prepaid items – This includes per diem interest, homeowners insurance and deposits to set up your escrow account.
What is title insurance?
It is a policy provided by the title company guaranteeing the accuracy of the title work done on your home at the time of purchase. As a buyer, you are required to purchase a lender's policy of title insurance as part of your standard closing costs, which protects the mortgage company.
If you want protection against legal issues related to the title of your home, you would also need an owner’s policy of title insurance. This coverage typically is paid for and provided by the seller of the home. Please check with your realtor and loan officer to ensure this is the case with your transaction.
What is private mortgage insurance (PMI)?
If your down payment equals less than 20% of your new home's purchase price, you typically are required to buy private mortgage insurance (PMI). This coverage protects the lender in case you were to default on your mortgage. The lower your down payment, the more you can expect to pay for PMI.
This insurance is paid for by you, the borrower. In some cases, there may be ways for you to avoid paying PMI at the time of purchase, or you may be able to stop paying for coverage at some point in the future.
What will my mortgage payments include?
For most borrowers, each monthly mortgage payment pays for:
- Principal - The total outstanding balance on your home.
- Interest - The cost of borrowing money for your mortgage.
- Taxes - The amount levied on your property by local government.
- Insurance - Coverage that protects you and the lender from potential losses caused by fire and natural hazards.
Make sure you communicate with your loan officer to find out if your payment includes taxes and insurance.
Should I choose a fixed rate or adjustable rate loan?
With a fixed rate mortgage, the interest rate never changes and the principal and interest portion of your mortgage payments remain stable. With an adjustable rate mortgage (ARM), the interest rate changes at regular intervals—usually once every year. For most ARM options, rate adjustments begin after an initial period—usually one to 10 years—during which the rate is fixed.
A fixed rate mortgage usually is recommended if you plan to stay in your home for a long time. An ARM is usually recommended if you do not plan to stay in your home for a long period, or if you are buying when interest rates are relatively high.
How and why do interest rates change?
Many people are surprised to learn that rates change on a daily, and sometimes hourly, basis. Interest rates fluctuate in response to changes in the financial markets. The bond market is generally a good indicator of the general trend of interest rates. Michigan Mutual, Inc. watches the mortgage-backed securities on a constant basis, ensuring you get the very best and more importantly delivering the best customer service.
What are discount points and should I pay them?
Discount points are paid in exchange for a lower interest rate on your mortgage. Paying discount points, each of which is equal to 1% of the loan amount, is often called “buying down” your rate.
Paying points can make sense depending on how long you plan to stay in your home. Since it is not advantageous for everyone to buy down the interest rate, we evaluate this with you on a case-by-case basis.
Should I lock my rate?
Locking your interest rate means Michigan Mutual, Inc. guarantees your rate for a given period of time on your loan, even if market rates change before closing.
Whether you should lock your interest rate depends on whether you expect rates to rise or fall before you close on your home. Since no one knows for sure which direction rates will go at a given time, it's best to consult your loan officer.