10 First-Time Home Buyer Mistakes in Michigan—and How to Avoid Them

1. Shopping for homes before getting preapproved

Browsing is harmless. Seriously shopping without a solid preapproval is different. You may focus on homes outside a comfortable range—or discover an avoidable financing issue after finding the one you want.

A strong preapproval should give you an estimated total payment, cash-to-close range, suitable loan choices and a plan for anything that needs attention.

Preapproval is conditional, not a final loan approval or a rate lock. Final approval still depends on underwriting, the property and your continued qualification.

2. Believing every buyer needs 20% down

A 20% down payment can reduce the loan amount and may eliminate private mortgage insurance on a conventional loan. But many eligible buyers purchase with less.

Your best down payment depends on the loan program, available savings, monthly-payment target and how much money you want left after closing.

3. Comparing mortgages by interest rate alone

An advertised rate may require discount points. Another option may have a slightly higher rate but lower upfront cost. Mortgage insurance and lender fees can change the result again.

Ask for comparable Loan Estimates, including lender credits and rate-lock details. Tax and insurance estimates should use consistent assumptions.

4. Treating the maximum approval as a spending goal

A lender evaluates documented income, debts and program rules. Your household budget includes everything else: utilities, repairs, childcare, travel, hobbies, savings and the life you want beyond the mortgage.

5. Making financial changes before closing

A new auto loan, credit card, financed furniture purchase, job change, co-signed debt or unexplained bank deposit can create questions—or change qualification—before closing.

6. Looking only at principal and interest

Add property taxes, homeowners insurance, any mortgage insurance and association dues to principal and interest—even when they are billed separately. In Michigan, taxable value generally uncaps in the calendar year after a taxable transfer. Do not assume the seller’s tax bill will be yours; check with the local assessor. Read the state’s explanation.

7. Planning for the down payment—but not closing costs

Distinguish costs paid before closing from the amount due on closing day and the savings you keep afterward. An inspection or appraisal may be paid in advance. The cash-to-close calculation includes down payment and closing costs, adjusted for deposits, credits and other amounts already paid. Avoid double-counting.

8. Assuming you do not qualify for a home buyer program

“First-time buyer” definitions, income limits, purchase-price limits, location requirements and credit guidelines vary. Some programs may also serve buyers who have not owned a principal residence during a specified period.

Also ask how assistance is repaid. MSHDA’s MI 10K DPA, for example, is an interest-free loan—not an unconditional grant. Repayment can be triggered by selling, refinancing, paying off the first mortgage or ending owner occupancy. Applications go through a MSHDA-approved lender; inclusion here does not establish Mike’s participation or guarantee eligibility.

9. Choosing a loan type before seeing the alternatives

FHA, conventional, VA, USDA and renovation loans solve different problems. The option with the smallest down payment may not create the smallest payment. The option with the lowest payment may not be best for the time you plan to own the home.

VA and USDA have specific eligibility requirements. Ask what costs or obligations remain with low-down-payment or assistance options, and choose a payment you can afford without depending on a future refinance.

10. Waiting for the “perfect” rate or market

Rates, prices and competition do not move on command. Waiting can be right when your finances or plans are not ready. Waiting solely for a perfect forecast can keep you stuck.