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Closing costs in Michigan

Looking to buy in Michigan? Your closing costs will vary based on the price of your house.

When buying a house in Michigan, expect to pay between 2% and 4% of the purchase price in closing costs. Normal closing costs in Michigan include title insurance, real estate transfer taxes and earnest deposits, a cost unique to this US state. In this guide, we’ll explore the average closing costs and how to prepare for a property purchase in Michigan as a Canadian.

Average closing costs in Michigan

Closing costs are the administrative and legal fees a property buyer will incur when finalizing a home sale. Property insurance, prepaid utility bills and title insurance are a few of the expenses that are typically included in closing costs. It’s important to estimate closing costs because they can be several thousand dollars.

Average closing costs in Michigan are US$4,014 after taxes as reported by ClosingCorp. The cost works out to be between 2.01% and 4.01% of the final purchase price. Across Michigan, the average property purchase price is between US$100,000 and US$200,000.

Other fees

Common closing costs in Michigan include real estate transfer taxes, title insurance, home inspections, origination fees, earnest deposits and escrow fees. These costs can be challenging to estimate, so be sure to set aside some funds to cover all the closing costs.

Down payment and exchange rates

There is little information on how much is required for a foreign buyer to put down for a property purchase in Michigan. As a general rule of thumb, Canadians looking to purchase personal property in the US should expect to put down at least 20%. If the property will be an investment property, expect to put down at least 40%. Keep in mind that the more you put down, the more favourable you’ll be in the eyes of lenders.

When buying a house in Michigan, closing costs and down payments will likely be made in US dollars, so you’ll need to consider the cost to exchange currency.

Who pays closing costs in Michigan?

In Michigan, the buyer and the seller split the closing costs. Below is a breakdown of who pays for what when closing a real estate sale.

For the buyer

TypeCost
Home inspectionUS$200 to US$400
Origination feeBetween 0.5% and 1% of mortgage amount
Earnest depositBetween 1% and 5% of final purchase price
Escrow feesBetween 1% and 2% of final purchase price
Property taxesVaries
Homeowners insurance (optional)Varies
Recording chargesUS$100

For the seller

TypeCost
Real estate transfer taxesVaries
Prorated property taxesVaries
Title insuranceVaries

Who pays for title insurance in Michigan?

Normally, the seller pays for title insurance during the closing process in Michigan.

How do Canadians get a mortgage for a US property?

Not all Canadian lenders are able to offer a mortgage for a US property purchase because they do not have legal jurisdiction in the US. The only exception is if the Canadian-based lender also operates in one or more states. In that case, the lender may be able to supply a mortgage to you. Before filling out an application, ask the lender if it operates in the US and, if so, in which states.

If you can’t find a Canadian lender that’s willing to work with you, you can always work with a US lender. Many Canadians purchase property in the US, and there are many lenders in the market that work with snowbirds. The main challenge you will face is getting approved. Mortgage eligibility can be more challenging to meet as a foreign buyer.

What to know about buying a condo or co-op in Michigan

Condos

In order to maintain the property and amenities, you will usually incur condo fees. In addition to a mortgage, condo fees can be expensive, so be sure to factor these fees into your budget.

Co-ops

A co-op is a unique kind of real estate ownership. When you buy a co-op, you aren’t actually purchasing real estate. Instead, you’re purchasing shares in a corporation that owns the building you want to purchase a unit in. Normally, monthly operating costs must be paid to maintain the building and common areas. These costs can be pricey in addition to loan payments.

Securing financing for a co-op purchase as a foreign buyer can be challenging. This is because the loan would not be considered a mortgage since the funds would be used for a share purchase. The lack of security and high loan amount can make you an unfavourable borrower.

Bottom line

If you plan on buying a house in Michigan, expect to pay around US$4,014 in closing costs, which is between 2.01% and 4.01% of the final purchase price. Set aside some extra cash for the purchase to ensure you’re able to cover the closing costs.

Frequently asked questions

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