Well, I have some great news!
We went to WHEP today (Washtenaw Housing Education Program), which is a special home-buying course put on by the Michigan State University Extension Office for free. We attended the October session at the request of our real estate agent and I’m glad we did.
Many governmental companies come together along with MSU to help out home buyers. This is especially helpful since the market crash in 2007-2009. The state of Michigan also offers incentives for going through this class in the form of grants for home buyers. The MSHDA (Michigan State Housing Development Authority) offers a whopping $7500 to home buyers in Michigan for taking this course. They pay up to 2% of your down payment and then the rest is to cover closing costs. It is available to partner with any other loan, including FHA, USDA, and other governmental loans.
The USDA Department of Rural Development also offers a zero down payment, low interest loan with no PMI insurance required. This is a HUGE money saver. PMI (Protected Mortgage Insurance) is extremely expensive and currently does not EVER come off of FHA loans in the state of Michigan. Since the person borrowing the loan has an extremely low down payment required, the PMI insurance is there to protect the mortgage lender because the owner does not have a large invested interest into the home.
Because of PMI insurance and interest rates, a $100k home could easily cost $250k over the life of the loan.
Here’s the good news. Not only do we qualify for the down payment assistance of $7500 from MSHDA, but we also qualify for the USDA loan. Between the two we will have closing costs covered, low interest, no PMI insurance AND 2% of the principle paid off as soon as we move in. We will be setting ourselves up for an amazing future! Instead of saving $10k and spending it all in closing costs and down payment, we will only need to spend enough money to cover the inspections and our Earnest Money Deposit, which we get back at closing.
Within the next two weeks I will be contacting the USDA dept in Flint, MI and getting our loan application put together. There is a slight chance the USDA won’t approve us of course, but we have met all their external qualifications, so I’m keeping my fingers crossed. So far, it looks like the hardest part of this journey will be finding the right property for us!
We will take any prayers, luck or good wishes you will send us! Our homestead dreams have the possibility of coming true now!