The homebuying process can feel like a marathon, but it’s much easier when you know the route. Generally, the journey consists of three main stages: preparation, house hunting, and purchasing.

Whether you are looking for your first house in Michigan or planning for a "forever home," follow this step-by-step guide to move from "searching" to "sold" with confidence.

Stage one: Preparation: Goals, Budget, and Preapproval

The better your new home fits your lifestyle and budget, the happier you’ll be living there. MSGCU mortgage experts encourage borrowers to sit down and discuss homebuying goals before they move forward in the buying process.

Lifestyle questions to consider:

• Timeline: Is this a starter home (5–10 years) or a forever home?
• Future Planning: Will you be starting a family or facing college expenses soon?
• Location: Do you prefer city culture, a quiet suburb, or a rural town?
• Commute: How much travel time to work or family can you tolerate?
• Space: Do you need a dedicated home office, hobby room, or guest suite?
• Pro Tip: Make a list of your preferences, then categorize them into "Must-Haves" vs. "Nice-to-Haves."

Understand the homebuying process

Now that you have your goals, it’s time to learn more about the homebuying process. MSGCU offers a Free Homebuyers Workshop (in-person or virtual). You’ll learn the secrets of successful homebuying, from budgeting to closing. Bonus: Complete the course and receive a coupon for $375 off a home appraisal.

Choosing a local mortgage lender:

Deciding on a mortgage lender is more than just choosing the lowest interest rate. Consider these questions as well:

• Local Expertise: A local lender like MSGCU knows the Michigan real estate market. You’ll talk to local mortgage experts, not a national call center.
• Long-Term Service: We service your mortgage for the duration of the loan, so you always know who to call with questions.
• Transparency: Interest rates can vary based on "points" (prepaid interest). One point equals 1% of your mortgage (e.g., $2,000 on a $200,000 loan), so it is important to understand if a quoted rate includes these upfront costs.

Determining your homebuying budget:

There are two costs involved in buying and owning a home: upfront, one-time costs and recurring costs.

Upfront costs will come from your savings, so it’s important to know how much you’ll need ahead of time. Here are some estimates to guide you:

• Down payment: 0% – 20% of the cost of the home. Most lenders offer loans with as little as 3% down. If you’re a first-time buyer, MSGCU offers a no down payment mortgage option to help you reach your home goal faster.
• PMI: With most lenders, if you put down less than 20%, you will be required to pay Private Mortgage Insurance (PMI), which protects the lender if you default on the loan. This additional cost is usually added to your monthly mortgage payment.
• Home inspection: The cost of a home inspection ranges from $200 - $600, depending on the size of the home.
• Closing costs: Include legal and administrative fees involved in the home purchase. Closing costs range from 2% to 4% of the purchase price.

In addition to utilities and maintenance, recurring costs include:

• Your monthly mortgage payment
• Property taxes (often added to your monthly mortgage payment)
• Homeowners insurance
• Homeowners’ association fees (charged by some neighborhoods and condominium associations – typically higher for a condominium than for a house)

MSGCU can help you crunch the numbers to determine the ideal budget for your home once you’re ready to start looking.

Home loan preapproval:

Getting preapproved makes you a serious buyer in the eyes of sellers. MSGCU offers True Preapproval, a thorough financial assessment that simplifies the final loan approval. Plus, our Rate Lock and Shop feature lets you lock in a rate for 90 days while you hunt for the perfect home.

Stage two: house hunting and making an offer

Before choosing a real estate agent, do some research online and ask family and friends for referrals. When you’ve decided on prospective agents, ask them these questions:

• How long have you been working in real estate?
• Do you work more often with buyers or sellers?
• How many active clients do you have at once?
• Do you have references I can contact?

Once you choose an agent, give them your list of preferences, and they’ll find listings meeting your criteria. Once you find the right home, your agent will help you prepare an offer. If you’ve been preapproved for a mortgage, your offer will be more attractive to the seller. Once the seller accepts your offer, congratulations! You’re onto the next stage: purchasing.

Stage three: purchasing your new home

1. Applying for a mortgage:

If you were preapproved earlier, this should make the application process easier. MSGCU doesn’t charge an application fee, but be aware that some banks do. With MSGCU, you can also complete most of the application process online.

The two most common types of mortgages are:

• Fixed-Rate Mortgage: A fixed-rate mortgage has the same interest rate throughout the life of the loan, so your monthly payment will always be the same. Loan terms range from 10 to 30 years.
• Adjustable-Rate Mortgage (ARM): An ARM starts with a lower fixed interest rate which is subject to increases after a certain number of years (e.g., five years). If you are planning to move within this number of years, the lower initial payment can save you money. It could also help you qualify for a larger mortgage.

2. Home inspection:

Arrange for a home inspection. If you’ve made your offer contingent on inspection, you can change or withdraw your offer if the home inspector finds significant flaws.

3. Closing:

Once the mortgage is approved, you’ll set a closing date. You will sign the final documents and pay your down payment and closing costs. After the last signature, you are officially a homeowner!

There is actually a "Stage Four": The Celebration! Once you have the keys, it's time for the housewarming party.

Ready to Start Your Homebuying Journey?

When you’re ready to learn more, connect with a friendly MSGCU mortgage consultant by calling (866) 674-2848 or schedule an appointment at any of our 24 Southeast Michigan branches. We’re here to help you reach your version of financial success.

Category: Home