DECEMBER 12TH, 2018

Michigan Mortgages

For many, the size of the housing market in Michigan is startling. Even four years ago, the state had a massive number of homes, and that number has done nothing but grow. In 2002, the US census showed that there were a total of 4,331,986 housing units in Michigan. The home ownership rate in Michigan is also impressive, the last census data showing it to be 73.8%. This is significantly higher than the national average of the same year, which was 66.2%, and it means that only 26.2% of the housing market are renters in Michigan. One possible explanation for this higher than average home ownership rate is that the median value of a home in Michigan is slightly lower than the national average ($115,600 in Michigan compared with $119,600 nationwide), and in which the median household income is slightly higher. This creates a situation where the average home buyer finds themselves with more money than average to use on houses that cost less than average. In other words, a situation that is conducive to following the American dream of home ownership, which is echoed in the census data.

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For home buyers looking to purchase a home in Michigan, timing can be important. Lulls in the mortgage market can equal opportunity as mortgage lenders often offer closing cost concessions to get loans in the door, however, getting the best interest rate available will be worth a few hundred dollars in concessions. As is often the case, the reason that there is a lull in the mortgage market is because rates have gone higher. Therefore, waiting for a lull means the rates are going to be high.
Keep in mind that interest rate changes are more cyclical than seasonal, so it is ideal to be aware of the market trends when choosing when to refinance. The type of mortgage is also important as changes in interest rates for fixed-rate loans follow changes in the 10-year U.S. Treasury note. On the other hand, changes in adjustable-rate mortgages, or ARMs, follow changes in short-term interest rates, and primarily by changes in the targeted federal funds rate.Short-term mortgage rates have been trending higher because the Federal Reserve Board’s Open Market Committee has raised the targeted fed funds rate by one-quarter of a percentage point 14 times since June of 2004. Potential home buyers should keep the fluctuations of the mortgage market and rates in mind if they want to get the best deal in the long term.

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