Find the Perfect Mortgage for Your Dream Home

A fixed-rate mortgage offers long-term stability and predictability. Your interest rate and therefore your principal and interest payment remains the same for the entire life of the loan. This consistency makes budgeting easier and protects you from market fluctuations. Common terms include 15, 20, and 30 years, with shorter terms typically offering lower interest rates but higher monthly payments.

An adjustable-rate mortgage (ARM), on the other hand, typically begins with a lower fixed interest rate for a specific introductory period, commonly 1, 3, 5, 7, or 10 years. After that period, the rate adjusts periodically (usually semi-annually or annually) based on a financial index plus a margin.

Key advantages of ARMs:

• Lower initial monthly payment
• Greater short-term affordability
• Useful for buyers planning to move or refinance before adjustment

Potential risks:

• Payment increases after the fixed period
• Exposure to market volatility
• Budget uncertainty long term

Rates on ARMs are influenced by factors such as market conditions, loan risk, and economic trends. Understanding your long-term plans is critical when choosing between these options.

Saving for a home involves more than just the down payment, it’s about preparing for the full financial picture.

Three primary components of funds needed at closing:

1. Down Payment

• Typically ranges from 3% to 20% of the purchase price
• Higher down payments reduce monthly payments and may eliminate mortgage insurance

2. Prepaid Items

These are upfront costs required to establish your escrow account:

• Property taxes (often several months to a full year)
• Homeowners insurance (usually 1 year upfront)
• Prepaid interest (covers the gap between closing date and first payment)
• Flood insurance, if applicable

3. Closing Costs

• Includes lender fees, title services, appraisal, underwriting, and third-party services
• Typically ranges from 2% to 5% of the purchase price

Beyond Closing Costs

It’s wise to maintain additional reserves for:

• Moving expenses
• Immediate home repairs or upgrades
• Emergency savings (ideally 2–6 months of expenses)

A detailed “funds to close” estimate from your Loan Officer can provide clarity and help you plan with confidence.

Yes, Michigan offers a variety of programs designed to make homeownership more accessible.

One of the most well-known resources is the Michigan State Housing Development Authority (MSHDA), which provides:

Some programs offer up to $10,000 in assistance, often structured as a deferred loan that is repaid when you sell, refinance, or pay off the mortgage.

Important considerations:

Ask an Independent Bank Loan Officer what special programs may be available in your area.

Down Payment Assistance (DPA) programs are designed to reduce the upfront financial burden of buying a home.

Types of DPA:

• Grants
  
  • Do not need to be repaid
  • Often based on income or location eligibility 
• Deferred Loans
  • No payments are due initially
  • The balance is repaid

Common requirements:

• Income limits
• First-time homebuyer status (in many cases)
• Completion of a homebuyer education course

DPA programs can be a powerful tool to help bridge the gap between savings and homeownership.

No, you do not need 20% down to purchase a home.

Many loan programs allow for significantly lower down payments:

• Conventional loans: as low as 3%–5%
• FHA loans: typically 3.5%
• VA and USDA loans: may offer 0% down (for eligible buyers)

Why 20%:

• Eliminates monthly private mortgage insurance (PMI)
• Reduces overall loan balance and monthly payment

However, waiting to save 20% isn’t always necessary or beneficial especially in rising markets. The right strategy depends on your financial goals and timeline.

There may be options available even for individuals with credit challenges.

• Income consistency and stability
• Employment history
• Debt-to-income ratio
• Savings and reserves
• Payment history (rent, utilities, etc.)

We look at the full financial picture, not just the score. Improving credit even slightly can also significantly impact loan terms and interest rates. Independent also has a specialized program to assist in helping borrowers become mortgage ready. Contact us today to learn more.

Yes, you may still be able to purchase a home with limited or no credit.

Alternative credit may be used to evaluate your history, items such as:

• Rent payments
• Utility bills (electric, gas, water)
• Cell phone or internet bills
• Insurance payments

We will also review:

• Your income consistency and stability
• Employment history
• Debt-to-income ratio
• Savings and reserves

While having established credit can make the process easier, it’s not always required. Building a record of on-time payments and maintaining stable income can help you qualify for certain loan programs, including some first-time homebuyer and FHA options.

Mortgage approval is based on a comprehensive financial review. Key factors include:

• Credit history and score – Reflects borrowing and payment behavior
• Income and employment stability – Consistency is key
• Debt-to-income ratio (DTI) – Measures affordability
• Assets and savings – Ability to cover closing costs and reserves
• Down payment amount – Impacts loan risk and terms

Lenders are ultimately assessing risk and repayment ability, aiming to ensure long-term financial sustainability for both parties.

These are two important, but very different steps in the mortgage process.

Prequalification

• Based on self-reported information
• Quick estimate of what you might qualify for
• Useful as a starting point

Preapproval

• Requires verified documentation (income, credit, assets)
• Often reviewed by underwriting
• Provides a stronger, more reliable approval amount

Why it matters:

A preapproval strengthens your offer when buying a home and shows sellers you are a serious, qualified buyer.

You should get preapproved before you begin house hunting.

Benefits of early preapproval:

• Defines your true budget and comfort range
• Helps estimate your monthly payment and cash needed
• Identifies potential issues early (credit, income, etc.)
• Strengthens your position when making an offer

Preparation creates confidence and confidence creates better decisions throughout the process.

Private Mortgage Insurance (PMI) protects the lender, not the borrower in case of default.

When is PMI required?

• Typically required on conventional loans with less than 20% down. FHA loans require mortgage insurance premiums (MIP) regardless of down payment.

How is mortgage insurance amount determined:

• Credit score
• Down payment amount
• Loan type and term

Key features:

• Mortgage insurance is typically added to your monthly payment
• Can often be removed once you reach 20% equity

While PMI adds cost, it allows buyers to enter the market sooner without needing a large down payment.