Michigan Home Loan Tips: Financing Home Mortgage with No Money Down

Michigan's housing market has lagged behind the nation's for several years, now. As of September 5th, Michigan had the greatest numbers of price decreases among ranked Metropolitan Statistical Areas (MSAs), according to the Office of Federal Housing Enterprise Oversight (OFHEO). Thirteen of Michigan's 16 ranked metropolitan areas exhibited quarterly price decreases.

"You can no longer count on the value being there when you go to sell your home," said Keith Ruloff, a Realtor with Century 21 Manuel Cole in Redford Township. "Houses are only worth what a ready, willing and able buyer is willing to pay for it."

Michigan's jobless rate of 7 percent is among the nation's highest as it continues to be weighed down by structural change in automotive industries. The drops in median home prices simply reflect the slumping Michigan economy, said Furhad Waquad, a Bloomfield Hills Realtor and president-elect of the Michigan Association of Realtors.

On the flip side, less appreciation in home prices can be advantageous in that it keeps homes here more affordable. According to the National Association of Realtors (NAR) affordability index, homes have historically been affordable in the Midwest (including Michigan) in relation to other regions and recently this affordability advantage has improved. Midwestern cities like Detroit and Grand Rapids can use this attribute to help attract new businesses and workers.

Now may be the time to look into Michigan home buying options. Because prices are low, you probably won't have to worry about a jumbo loan (non-conforming loan that exceeds Fannie Mae and Freddie Mac 2006 $417,000 lending limits). With rates as low as they are, it's probably best to get a fixed interest rate loan rather than an adjustable rate or interest only loan to avoid rate hikes and higher monthly mortgage payments.

If you do not have the cash reserves for a down payment, you may want to look into a 100% 1st mortgage, also known as a no money down home loan. This loan is sometimes referred to as a 80-20 home mortgage because it generally entails a first mortgage for 80% of the purchase price and a piggyback second mortgage for the remaining 20% balance. You need second mortgage with your purchase or you will have to pay mortgage insurance, also known as private mortgage insurance (PMI). PMI is costly, only benefits the lender and has no tax advantages for the buyer. Whereas, with an 80-20 mortgage loan, the interest you pay on your loans may be up to 100% tax deductible.

Nationwide Mortgages offers consumers residing in Michigan, home mortgage loan tips for refinance, home equity, second mortgages, home purchase and debt consolidation loans.

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