11 Tips For Buying A House In Michigan

“Pure Michigan” is a beautiful and unique state that’s a great place to call home. Whether you’re seeking a big city environment, a rural paradise or something in between, Michigan has something for every hopeful home buyer.

Considering buying a house in Michigan? Keep in mind these helpful tips as you go through the home buying process.

Why Buy A House In Michigan?

Michigan real estate can be a solid investment, whether you’re a current resident ready to become a first-time homeowner or you’re looking to move to the state and put down roots. In fact, it’s ranked #14 on our list of cheapest states to buy a house.

Michigan’s cost of living is lower than the national average. Homes here are affordable and see a slightly higher than average rate of appreciation. The median home value in Michigan is $224,400, while in the U.S., the median value is $320,900, according to the U.S. Census Bureau.

Ten years ago, Michigan’s median home value was $115,700, meaning the state’s median home value has increased by 93.95%. Based on this information, Michigan home values are increasing at a higher rate than the national average, which increased only 86.68% over the same period. This means that it’s likely the home you buy in this state will appreciate in value, making for a worthy investment as long as you maintain the property.

In addition to its affordable, investable real estate, Michigan is densely packed with cultural offerings and is a nature-lover’s dream.

Where Are The Top Places To Buy A House In Michigan?

Let’s take a look at some of the top places to live in Michigan.

Ann Arbor

• Median Sold Price: $487,490

Ann Arbor is a picture-perfect college town and cultural hub. With its many theaters, galleries and museums, this city is a haven for artsy and intellectual types.

Plus, with such a diverse array of delicious restaurants and funky shops, residents never run out of things to do on the weekend, especially in Ann Arbor’s charming, historic Kerrytown district.

Check out Ann Arbor real estate trends or search Ann Arbor real estate listings.

Royal Oak

• Median Sold Price: $340,000

Friendly neighbors, lots of local amenities and an adorable downtown district make this Detroit suburb a great place to live.

For an area with such a small-town vibe, Royal Oak has an impressive theater and music scene that regularly attracts nationally renowned talent. Its walkable downtown area is great for shopping or outdoor dining.

Check out Royal Oak real estate trends or search Royal Oak real estate listings.

Grand Rapids

• Median Sold Price: $295,000

For such a lively urban area, the extremely affordable home prices in Grand Rapids are hard to beat.

Grand Rapids is an undeniably fun place to live. Touted by Expedia as one of the country’s “Super Cool Cities,” this locale is home to so many great breweries it’s been nicknamed “Beer City USA.”

If you aren’t into craft brews, Grand Rapids is chock full of great museums, art, nightlife and music.

Check out Grand Rapids real estate trends or search Grand Rapids real estate listings.

Traverse City

• Median List Price: $428,130

Spend your days enjoying the natural beauty of the Sleeping Bear Dunes National Lakeshore (or the area’s numerous other gorgeous outdoor destinations). And then spend your evenings drinking and tasting all that Traverse City has to offer – from wineries to microbreweries to the city’s many great restaurants.

Whether you like hiking, biking, fishing, beach bumming, alfresco dining or local produce shopping, there’s something for you in Traverse City. As long as you don’t mind settling down in a touristy area, this city is a great place to live, especially if you can brave the winter.

Check out Traverse City real estate trends or search Traverse City real estate listings.

Novi

• Median Sold Price: $431,250

The town of Novi has made quite a few “best places to live” lists in spite of being somewhat of an unknown entity to people who aren’t from Michigan. But Novi’s residents know that the title is well earned.

Novi is a bustling suburb with lots of shopping and ample employment opportunities. It’s safe, friendly and has great schools, making it the perfect choice for families. Novi is a short drive away from both Detroit and Ann Arbor. Whether you’re a commuter or just looking for something fun to do on the weekend, you’ll appreciate being in such an ideal location.

Check out Novi real estate trends or search Novi real estate listings.

How To Buy A House In Michigan: Our Must-Read Tips

Here are our 11 top tips for home buyers wondering how to go about buying a house in Michigan.

1. Know The Real Estate Market

It’s important to understand the current conditions of the local housing market, including whether you’ll be buying in a buyer’s market or a seller’s market.

To learn about the real estate market in the area you’re moving to, use Rocket Homes℠ Trend Reports. We’ll tell you about local market conditions, how home prices are trending and how fast homes are selling.

Knowing about the market will give you an idea of how much competition you’re up against and help you move strategically when making an offer.

2. Use A Trusted Michigan Real Estate Agent

Another key to home buying success regardless of your location is working with a great real estate agent. The right agent will be an expert in the local market and help you make a successful offer on a home you love.

3. Explore Your Financing Options

Unless you plan on paying for the home with cash, you’ll need to obtain a mortgage.

If you’re a first-timer, you might want to look into programs for first-time home buyers and resources available to you that could help make getting a home a little easier.

4. Understand Michigan Property Taxes

In Michigan, property taxes are generally due twice a year: once on July 1 and again on December 1. Taxes are paid in advance, meaning home buyers will need to reimburse sellers for a prorated portion of the property taxes the seller has already paid.

The tax rate you’ll pay will depend on where in Michigan you reside, but the average effective property tax rate for Michiganders is around 1.32%.

5. Consider Your Need For Flood Insurance

For people buying in a designated high-risk flood zone, buying flood insurance is a no-brainer. If you’re using a mortgage loan to purchase the home, your lender will require you to carry a flood insurance policy. This is because homeowners insurance doesn’t cover flood damage.

However, even home buyers who aren’t required to buy flood insurance could still end up benefiting from it, especially in a state with as many naturally occurring bodies of water as Michigan. Be sure to consider your new home’s level of flood risk and whether buying a policy makes sense for you.

6. Learn The Laws For Lakefront Property

If you’re buying lakefront property in Michigan, you must understand how much of that lakefront is included in the property.

Michigan property law refers to something called “riparian rights” regarding ownership of lakefront or other water-adjacent property. Basically, it’s a question of who owns the shore, who legally has access to the water and who owns the land beneath the water.

In practice, riparian rights allow lakefront property owners to do things like build a dock on their shore. They also prevent any actions that impede other owners’ or the general public’s ability to use the water.

When you purchase a lake house in Michigan, be sure you understand what your rights to the lake are.

7. Ask About HOA Rules

If you’re purchasing in a neighborhood governed by a homeowners association (HOA), you need to understand all the rules and restrictions.

Some HOAs require you to get approval before making changes to the exterior of your home. Or they’ll have restrictions on the types of items you can keep on your land (such as a shed or large vehicle). Make sure the community’s rules are compatible with your individual needs and wants.

8. Prepare For Closing Costs

Typically, borrowers pay 3% – 6% of their total mortgage loan amount in closing costs. That means for a home worth $224,400 (the median home value in Michigan), you can expect to pay $6,732 – $13,464. These will vary, but you can expect closing costs to be lower for a lower priced home and higher for a bigger, more expensive one. One study by Assurance IQ found that the average closing costs in Michigan were $4,378.16.

9. Know Where Your Water Comes From

In Michigan, many homes are supplied their water by private household wells rather than a municipal supply. As a homeowner, you’ll need to regularly maintain your well to ensure it stays clean and works properly.

If you’re considering buying a house with a well, ensure that the well has been inspected. You may need to hire an inspector who specializes in wells, in addition to a regular home inspector.

Some Michigan counties require well and septic system inspections prior to a home sale. The responsibility for this typically falls on the seller, who’s then required to make any necessary repairs before closing. Your lender may require this type of inspection as well.

Another concern is that Michigan has higher levels of arsenic in its groundwater than many other areas. Be sure to have the home’s water supply tested and, if arsenic levels are beyond what’s deemed safe, consider the cost of having filters installed.

10. Consider Your Lifestyle

The great thing about Michigan is that it has something for everyone, and every town is different. If you’re moving to Michigan but aren’t quite sure exactly where you want to live, be sure to take some time to research the different cities in the area you’re looking to live in to find the right place for you.

Whether it’s the urban environments of Detroit or Grand Rapids, the beach town vibes of Traverse City or Holland, the natural beauty of the Upper Peninsula or the small-town charm of the state’s many dynamic suburbs, everyone can find a spot in Michigan that really feels like home.

11. Make Your Move Before Winter

Winter in Michigan can certainly be beautiful and picturesque, but it can also be long, extremely cold and dangerously icy.

You don’t want to be unloading heavy boxes from a moving truck in several inches of snow. If you can, wait for things to thaw out before making your move to Michigan.

Buying Property In Michigan: FAQs

If you’re considering moving to Michigan, you likely still have some questions before packing up and hitting the road. Here are some frequently asked questions about buying property in Michigan – and their answers.

What does my credit score need to be to buy a house in Michigan?

The credit score needed to buy a house in Michigan will depend on the type of loan you take out and lender requirements. For example, a conventional loan typically requires a credit score of 620, while Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loans usually require a 580 minimum score. But each lender can have their own standards and may accept a higher or lower score based on your qualifications.

How much do I need for a down payment on a house in Michigan?

For FHA loans, borrowers typically need to put at least 3.5% down to buy a home. Conventional loan down payments vary but expect to put down anywhere from 3% – 20% depending on your qualifications and whether you want to avoid private mortgage insurance. If you’re using a VA or U.S. Department of Agriculture (USDA) loan to buy a house in Michigan, you can avoid a down payment altogether.

Rocket Mortgage^® doesn’t offer USDA loans at this time.

How much are property taxes in Michigan?

The average property tax payment in Michigan is $2,636, and the average tax rate is 1.32%. Average property taxes across the country range from 0.27% – 2.26%, and Michigan sits on the higher end of the averages of all 50 states (37 out of 50). Property taxes can vary by city, so research the average rates in your city to get a more accurate idea of what you’ll pay.

What are the first steps I should take toward buying a house in Michigan?

If you’ve landed on Michigan as the perfect place for you to live, the first step is to get preapproved for a mortgage. A mortgage preapproval will tell you how much house you can afford, which can be especially valuable when house hunting in an unfamiliar place. Shop around for reputable mortgage lenders before putting in offers on Michigan homes for sale.

The Bottom Line: Do Your Research When Buying A Home In Michigan

Overall, Michigan is a great state to settle in and buy a house. Keep some of the unique details of Michigan homeownership in mind as you go through the home buying process.

Ready to start shopping for homes in Michigan? Connect with our network of trusted agents.