Two piles of money at closing

Buyers plan carefully for the down payment and then get surprised by the second pile: closing costs. These are the fees to originate your loan, transfer the property safely, and pre-fund your taxes and insurance. They're separate from — and on top of — your down payment.

Lender and loan fees

  • Origination/underwriting fees — what the lender charges to make the loan.
  • Appraisal — the lender-ordered valuation of the home.
  • Credit report and flood certification — small administrative fees.
  • Discount points — optional prepaid interest to lower your rate; worth a break-even calculation, not a default.

Title and closing fees — the Michigan custom

Title insurance protects against ownership defects. In Michigan the custom (always confirm in your purchase agreement) is:

  • Seller customarily pays the owner's title policy and the state and county transfer tax.
  • Buyer customarily pays the lender's title policy, closing/settlement fees, and recording fees for the deed and mortgage.

These customs are starting points, not law — in a strong negotiation, either side can agree to shift them.

Prepaids and escrow: not fees, but still cash due

The biggest chunk of a buyer's closing funds is often not a fee at all. You'll typically prepay your first year of homeowners insurance, several months of property taxes into escrow, and interest from your closing date to month-end. Michigan's summer/winter property tax cycle means the escrow math depends on when in the year you close — your lender and title company will proration it precisely.

Costs you pay before closing

Budget separately for the home inspection (paid when performed) and any specialty inspections — sewer scope, radon, well and septic in outlying areas. In older Metro Detroit housing stock these are money well spent; skipping them to save a few hundred dollars is how buyers inherit four-figure surprises.

Where you can negotiate

Seller concessions — a seller credit toward your closing costs — are common and capped by loan program. Whether to ask depends on the listing: on a home with heavy competition, a concession request weakens your offer; on one sitting with longer days on market, it's often achievable. This is exactly the read I give buyers before writing an offer — send me the property you're looking at.

Your two control documents

Federal rules give you two documents that make costs transparent: the Loan Estimate (within three business days of applying — use it to compare lenders) and the Closing Disclosure (at least three business days before closing — compare it line-by-line against the estimate and question anything that grew).

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Frequently asked questions

Who pays transfer tax in Michigan?
By long-standing custom in Michigan, the seller pays the state and county transfer tax. Confirm it in the purchase agreement — everything is ultimately negotiable.
Can the seller cover my closing costs?
Often, yes. Seller concessions are negotiable and common, though loan programs cap how much a seller can contribute. Whether to ask depends on how competitive the specific listing is.
When do I find out my exact closing costs?
Your lender must send a Loan Estimate within three business days of application, and a Closing Disclosure with final numbers at least three business days before closing. Compare the two and ask about anything that changed.

Next steps: Build the rest of the budget with how much house you can afford in Michigan, see the full buying process step by step, or browse neighborhood guides.

This article is general educational information, not legal, financial, mortgage, tax, or title advice. Fees, customs, and loan program rules vary and change — confirm specifics with your lender, title company, and the appropriate licensed professionals.