1. The 2–4% Rule, Itemized
- Lender fees: origination, underwriting and processing.
- Appraisal: ordered by the lender to support the loan value.
- Title: lender's policy, search and settlement fees (the seller customarily provides the owner's policy).
- Recording: county fees to record the deed and mortgage.
- Escrow prepaids: initial tax and insurance reserves.
On a $350,000 purchase, plan roughly $7,000–$14,000 beyond your down payment — your lender's Loan Estimate will pin the real figure within days of application.
2. Michigan Specifics Buyers Miss
- Transfer taxes (0.86%) are traditionally the seller's cost in Michigan.
- File the Principal Residence Exemption after closing to save up to 18 mills yearly.
- Summer and winter tax bills mean prorations at closing can swing either way — read them.
- MSHDA MI DPA can cover up to $10,000 of down payment and allowable closing costs.
3. Lowering Cash to Close, Honestly
Options include seller concessions negotiated in the offer, lender credits in exchange for rate, and MSHDA assistance. Each trades something — price, rate or future payoff — so compare them on total cost over the years you will actually keep the loan. A buyer roadmap from Sam lays the three side by side before you tour.
Frequently Asked Questions
How much are closing costs for Michigan buyers?
Generally 2% to 4% of the purchase price. That covers lender origination, appraisal, title services, recording fees and the initial escrow funding for property taxes and homeowners insurance. Michigan transfer taxes are traditionally paid by the seller.
Can down payment assistance cover closing costs?
Yes — the MSHDA MI DPA loan provides up to $10,000 toward down payment and allowable closing costs for eligible buyers (minimum 640 credit score), at zero percent interest with no monthly payment until you sell, refinance or pay off the mortgage.
What are escrow prepaids?
Your lender collects several months of property taxes and homeowners insurance at closing to seed your escrow account. On a Michigan home this is often the largest single piece of cash to close after the down payment itself.
