Leverage Your Home’s Value with a Home Equity Line of Credit in Michigan
8 minute read
November 11, 2022


If you own a home in the Wolverine state, you may qualify for a home equity line of credit in Michigan (HELOC). 

A HELOC is a particular type of loan that uses the value of your home as collateral, allowing you to borrow money while keeping your home as security. 

It’s a great way to access funds to get those long-needed renovations done, pay off high-interest debt, or even start a business.

Michigan has some of the most favorable HELOC terms in the country, which can be a great option for homeowners looking to take advantage of their home’s equity. 

With AAA Banking HELOCs, you’ll often find a lower interest rate, more flexible repayment terms, and a higher loan-to-value ratio than many other loans. 

With the right HELOC provider and a little planning, you can transform the most of your home’s equity and secure the funds you need for your financial goals.

What’s involved in getting a home equity line of credit in Michigan? Let’s take a look. 

Are HELOCs the same in Michigan as they are everywhere else?

Most home equity lines of credit (HELOC) in Michigan will be similar to those in the rest of the United States

HELOCs are secured by your home’s equity, which is the difference between the value of the home and the amount you owe on the mortgage. 

In Michigan, HELOCs are typically used for home improvements, large purchases, or debt consolidation, but they can be used for whatever purpose you choose. 

Home equity line of credit in Michigan—the basics

In Michigan, you can typically borrow up to 80% of the value of your home minus any existing mortgages. 

The funds can be used for virtually any purpose and can be accessed through a checkbook, credit cards, or online transfers. Your interest rates for a home equity line of credit in Michigan are usually variable and tied to the prime rate. 

The terms of any home equity line of credit in Michigan will depend on the individual lender, but most HELOCs have a draw period of 5-10 years. 

You can borrow up to the maximum during this draw period and make minimum payments. When this draw period ends, you will have to start making larger payments, and the loan will have to be entirely paid off. 

Lenders for a home equity line of credit in Michigan

When shopping around for a home equity line of credit lender in Michigan, comparing fees and rates is essential. Some lenders charge an origination fee, while others offer a more competitive interest rate. 

It’s also important to be aware of prepayment penalties, which can be costly if you decide to pay off the loan early. 

Overall, a home equity line of credit in Michigan is similar to one you would find anywhere else in the United States. But—be sure to compare rates and fees before signing up for any home equity line of credit in Michigan.

Check your mortgage options

Home equity line of credit requirements

The AAA Banking’s requirements for a home equity line of credit include:

  • At least 15-20% of your home’s market value in equity 
  • Loan-to-value ratio assessment. If you have sufficient equity, you may be able to borrow up to 90% of the value of your home (85% for condos or townhouses). 
  • A 680 or above credit score 
  • Verifiable income
  • Proof of consistent, current mortgage payment history

We’ll assess your debt-to-income ratio to ensure that no more than 45% of your monthly income goes toward paying current debts. 

You may also need to provide evidence of your employment history and consistent income. If you have any queries about these requirements, we’re here to help.

What is happening in the mortgage industry in Michigan?

The Michigan economy has seen some positive growth in the last two years. The Michigan state government’s most recent economic data showed its GDP had improved the most out of all the Great Lake States (4.5%). 

Furthermore, Michigan’s year-over-year percent change in total GDP ranked ninth among all states.

Forecasting for the next two years, state economic predictions said the economy should return to modest growth for the calendar year of 2023 at 0.4%. This growth is expected to continue at a modest pace of 1.2% in 2024 and 2.3% in 2025.

Housing market and mortgage industry indicators

In December 2022, the median price for houses in Michigan was $215,300, which was a 0.52% decrease from the previous year. 

Overall, the number of homes sold was 28.8% less than the corresponding period from the previous year, with 8,510 homes being sold during December of 2021, compared to 11,958 the year before. 

Here are some other statistics about the current real estate market in Michigan:

  • The median days on the market were 34 days higher than the prior year. 
  • There were 27,141 homes available, up 4.2% from the same period in 2020. 
  • The count of newly listed homes was 5,723, a 20.6% reduction year over year. 
  • The average months of supply were 2, a 1-year increase. 
  • 24.9% of the homes in Michigan sold lower than the listed price, a 13.9-point decrease from the previous year. 
  • 23.4% of homes had their prices cut, a 4% raise from December 2020. 
  • The sale-to-list price was 97.4%, which had dropped 1.8 points from the previous year.

Using the power of your home equity to achieve your goals

Owning your own house is a significant investment, which brings with it a variety of financial opportunities. You can utilize the money you’ve paid into your house over the years and its value to fund other projects, such as:

  • Buying a second home
  • Renovating your primary residence
  • Starting a business

HELOCs allow you to make the most of the equity you have put into your house by taking out a loan against it to finance other expenses or pay off high-interest debt. 

A HELOC offers flexible, low-interest, and affordable financing accessible as a revolving line of credit.

At AAA Banking, we are not only mortgage specialists. We are your guide in making home financing cost-effective, convenient, and personalized. Rely on us when you’re looking to purchase a house or refinance an existing loan.

Reach out to one of our experienced loan officers, and let’s see how—rather than you just working for your home—we can make your home work for you.

*Consult your tax advisor for further information regarding the deductibility of interest and charges. 

Annual Percentage Rate (APR). Rates and terms effective as of 08/30/2022.  Advertised rates and terms are subject to change without notice.  Additional terms and restrictions apply. Subject to borrower qualifications. Offer is based on maximum combined loan to value of 90%. This is a variable interest rate product. Variable rates are calculated by using the most recent Prime rate published in the “Money Rates” section of The Wall Street Journal. The current Prime rate 5.50%. After the initial fixed-rate period, the minimum APR that will be imposed can range from 3.00% to the maximum of 18%. Upon approval, your home equity line of credit amount may vary based on your specific situation. You must also pay certain fees to third parties to open a line of credit. To open a typical line of credit of $75,000, borrower-closing costs are estimated to range from $350 – $2,500 depending on the geographic location of the property. Property insurance is required and flood insurance may be required. During the draw period, your minimum monthly payment will be the interest on your current balance (any funds you have drawn from your HELOC). During your repayment period, your payments will include the principal amount plus interest. Home equity line of credit has a 10-year draw period and a 15-year repayment period. Home equity lines of credit must be secured by owner-occupied primary residences and second homes only. Minimum draw amount after closing is $100. 

Your minimum payment can vary during both the draw period and the repayment period. During the draw period, your minimum monthly payment will be the interest on your current balance (any funds you have drawn from your HELOC). For example, if you draw $50,000 and your interest rate is 6.00%, then your minimum payment at this rate during the draw period will be $250.00 a month. When the draw period ends, your repayment period begins. During the repayment period your payment will include the principal amount plus interest in an amortized schedule. For example, if your balance due is $50,000 and your interest rate is 6.00% then your minimum payment at this rate during the repayment period will be $421.93 a month. During the application process we will provide important disclosures about this product that you are encouraged to carefully review.

Image by Nattanan Kanchanaprat from Pixabay

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