Buying a house is a big decision and the process can be intimidating, to first-time and experienced home buyers alike. This purchase is a big step anywhere in the world, and the Michigan real estate market is no exception. But when you understand the steps to buying a house in Michigan, you’ll be ready for each part of the process.
The 12 Essential Steps to Buying a House in Michigan
1. Deciding To Buy
You’re probably already at this step, or you’ve passed it and you're wondering when to buy your new home or sell your old one. You might be asking yourself why you want to buy a house. This is an important step to buying a house in Michigan or anywhere in the world, as it will help you narrow the market and find the home that’s perfect for you.
Different people want to buy a home for different reasons. You might ask yourself the following questions as you go through this step to buying a house.
- Am I looking at the price of buying vs renting? You’ll want to pay special attention to the price of the home.
- Do I want to raise a family in the home? You might be looking for a home of a particular size.
- Am I prepared for home improvements and repairs? If not, a newly updated, move-in-ready home might be best for you.
- Do I want to build equity in the home? You might be looking for a fixer-upper.
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2. Getting Your Finances in Order
It’s tempting to start looking at homes once you decide you’re ready to buy, but you’re skipping an important step. Before you start looking at houses, you should know what you’re financially ready to take on.
This step to buying a house in Michigan is important for a number for reasons; you’ll know what you’re financially ready for, you can narrow the real estate market by price, and you be able to make a more serious offer. In a competitive seller’s market, like that of Mid-Michigan, your offer is likely to be ignored if you’re not at least prequalified for a mortgage.
At this step, you’ll want to assess your financial position yourself, and you’ll want to select a lender. This way you will know what downpayment and monthly payment you are comfortable with, and you’ll know what you’re approved for. Remember, they might not be the same. Look into homebuying specials offered by local MIchigan banks and credit unions, as well as Michigan-specific home-buying programs, like the Michigan State Housing Development Authority (MSHDA) home loan.
Consider the following as you look at your own finances and choose a lender.
- How much debt to you have? What are the payments for this like?
- What is your income like? Will you have this income for the foreseeable future? Do you have reasons to believe it will increase or decrease?
- Do you foresee future expenses, such as going back to school, getting a new car, or having a child?
- What is your credit like? Can it be improved? How will this impact your interest rate?
- How long do you think you will be in the area? Does this make sense with your mortgage timeframe?
- Do you have a history with this lender? Have you enjoyed working with them?
- Have you talked to other lenders about your loan options? Is a better interest rate or down payment available elsewhere?
- Are FHA, VA, USDA or other types of government loans available?
3. Choosing Home Features
Now that you know why you want to buy a home and what you can afford, it’s time to get specific about the features you want. This will help you narrow the real estate market even further, and find homes that are perfect for you. This will ensure that you don’t waste time with homes that aren’t right for you, and you can make a move on your ideal home faster.
Ask yourself the following when you’ve reached this step to buying a home in Michigan;
- Which features are essential, and which are optional?
- What are some of the most valuable features for homebuyers in Michigan
- What are your most important priorities? New updates and the latest amenities? A good neighborhood and good schools? A certain amount of space?
- How many bedrooms and bathrooms do you want?
- Do you want a big yard? What about a deck or a patio?
- What updates or repairs are you willing to make? Which repairs would be deal-breakers for you?
4. Starting Your Search!
This is one of the most exciting steps to buying a home in Michigan. It’s time to start your search!
There are a lot of home search tools available today. It’s important to choose a search tool with the maximum number of listings available, and that the information listed is complete, accurate and up-to-date. You’ll also want a mobile and desktop version of the search tool available, and you’ll want to be able to save your searches and send them to your spouse, partner, friends or family for a second opinion. You also want to be able to quickly contact a knowledgeable Realtor if you see a home you want.
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5. Working with an Agent
When housing inventory is low, you’ll want to be able to move quickly on the home you want. An agent with the latest listings and experience in the local real estate market can help you find your perfect home fast. This step to buying a home in Michigan can make all the other steps go smoother.
Ask yourself what you’re looking for in a Realtor and see what their previous clients have said. You want a real estate agent with knowledge of the area, who will listen to your needs, and has exceptional negotiating skills. This is a big step; choose a trusted agent to represent your interests.
6. Making an Offer
You’ve found your dream home. At this stage, it’s important to work closely with your Realtor to make the right offer. You want to negotiate an amount that will push out other buyers, but not pay too much. Your Realtor will use a variety of tools and negotiation strategies to make the right offer.
Good news; it’s accepted!
It’s tempting to celebrate here, but there are still a few more steps before you can call the home yours.
7. Earnest Money and Contract
Once your offer is accepted, you’ll want it in writing so you know the sellers aren’t considering any other offers. This means you’ll want to sign a preliminary contract and put down earnest money. This step is important to both the buyer and the seller.
For the buyer, the earnest money and the contract prevents the sellers from considering other offers, and potentially selling the house out from under you. For the sellers, this shows that you are serious about buying the home so they can feel confident taking their home off the market.
When signing this first contract, you’ll want to read it carefully. Ask your agent about anything you aren’t sure of. Make sure you have some options to back out of the deal if you later find out the house isn’t what you thought, such as during an inspection.
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8. Getting the Appraisal
Your lender will most likely require an appraisal of the property. This is to make sure the loan amount matches the value of the home and the lender’s investment is safe.
Buyers are usually responsible for the costs of an appraisal. Work with your lender and make sure the appraisal moves along quickly. If the appraisal isn’t completed in the time frame allotted in the contract, it can cause the deal to fall through.
If the appraisal value doesn’t match the offer you and the seller agreed on, you’ll need to renegotiate the contract.
9. Getting the Inspection
An inspection isn’t necessarily required by the lender, but it’s a good idea for home buyers to do. This will give you a clear picture of the condition of the property. If there are major defects or home inspection red flags that the sellers didn’t know about (or didn’t disclose) you can decide if it’s still a good deal, or if you want to renegotiate with the sellers on some points. When buying a home in Michigan, especially Mid-Michigan, pay close attention to factors like flood risks, damaged foundations, drafty windows, plumbing problems due to recently frozen or burst pipes, or pest problems that are particularly problematic in Michigan, like stink bugs, lady beetles, or carpenter ants.
10. Tying Loose Ends
You’re almost finished! You’ll want to complete any last items that may be required by your lender, by the seller, or title company.
These items might include a home warranty, also called a residential service contract, which will protect you from expensive repairs an older home may need later. You’ll most likely need to purchase and prove you have home insurance. Finally, you may need a land survey for an older home to prove where the property lines exist. You may also wish to purchase title insurance in the event another party, such as someone the previous owner was indebted to, makes a claim against the property.
These items may be included in closing costs your Realtor has negotiated with the seller. Make sure you have an estimate of how much these costs will be before you close.
11. Time to Close
You’re almost at the last step in buying a home in Michigan. At this stage, the deal is nearly done.
To close the deal, you, your real estate agent, sellers, sellers’ agent, title company, and other parties will need to sign a series of documents. At closing, the deed and title will transfer, money will change hands, contracts will be finalized, and ownership of the property will go to you. With one final walk-through of the property to ensure the condition is the same, you will get the keys.
12. Time to Move in!
Your patience has paid off and the property is yours! In some cases, you may have negotiated a particular move-in date as a part of the deal to give the seller’s more time to move. If this wasn’t a part of the deal, then it’s time to move in!
When you understand the steps to buying a home in Michigan, it may not seem quite so intimidating. Working with experts and getting all the information you can can help make every step in the process go even smoother, and make sure you aren’t caught by surprise.
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