How to Calculate Closing Costs for Buyer in Michigan

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Reviewed by: David Chen, CFA. This financial tool provides general estimates and should not replace professional legal or lending advice.

Use the Michigan Closing Cost Calculator to quickly estimate the out-of-pocket expenses required for purchasing a home in the state. This includes lender fees, title costs, and necessary escrow prepaids.

Michigan Closing Costs Calculator

Estimated Total Closing Costs:

$0.00

Detailed Calculation Breakdown


      

    


    
    

      
How to Calculate Closing Costs for a Buyer in Michigan Formula

      

        
          Total Closing Costs (C) = Lender Fees (CF) + Title Fees (CT) + Tax Escrow (EPT) + Insurance Escrow (EPI)
          

          Where:
          

          CF = Loan Amount * (Lender Fees % / 100)
          

          EPT = Annual Property Tax / 12 * 6 months
          

          EPI = Annual Insurance / 12 * 2 months
        
      

      

        Formula Sources:
        LendingTree – Michigan Closing Costs,
        Zillow – Guide to Closing Costs
      


      
Variables Explained

      
The calculation uses the following variables, corresponding to the input fields:

      
    
        
  • Purchase Price: The total agreed-upon cost of the home.
    • 
        
  • Loan Amount: The amount borrowed from the lender. This is the purchase price minus the down payment.
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  • Estimated Annual Property Taxes: Used to calculate the initial tax escrow amount, which is typically 6 months of future property tax payments.
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  • Estimated Annual Home Insurance: Used to calculate the initial insurance escrow amount, typically 2 months of premium plus the first year’s premium. (We simplify here to 2 months escrow).
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  • Lender Fees (% of Loan): An estimated percentage (usually 1.5% – 3.0%) covering origination, underwriting, and application fees.
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  • Title & Settlement Fees (Flat $): An estimated flat fee covering title search, title insurance premiums, attorney fees, and recording fees.
    • 
      


      
What is the Closing Cost for a Michigan Buyer?

      

        Closing costs in Michigan are the required fees and prepaid expenses paid by the buyer and seller to finalize a real estate transaction. For buyers, these costs generally range from 3% to 5% of the total loan amount, although this can vary widely based on the lender, the specific county (for recording and transfer fees), and the required escrow deposits. They are separate from the down payment.
      

      

        Michigan has unique rules, such as the seller typically paying the State of Michigan transfer tax. However, the buyer is still responsible for various fees, including the mortgage tax (a county-level recording tax, usually covered in the Flat Fee estimate here) and, most importantly, the necessary prepaids. Prepaids include the first year’s homeowner’s insurance premium and initial deposits into an escrow account for property taxes and insurance.
      


      
How to Calculate Michigan Closing Costs (Example)

      
Let’s use a sample scenario to show the calculation process:

      
    
        
  1. Establish the Loan and Purchase Details: Assume a Purchase Price of $250,000, a Loan Amount of $200,000, Annual Property Taxes of $3,000, and Annual Insurance of $1,000.
    2. 
        
  2. Calculate Lender Fees: Using an estimated 2.0% lender fee: $200,000 * 2.0% = $4,000.
    3. 
        
  3. Add Fixed/Title Fees: Add a flat fee for appraisal, title, and settlement services: $1,200.
    4. 
        
  4. Calculate Property Tax Escrow: Six months of property taxes are typically required: ($3,000 / 12) * 6 months = $1,500.
    5. 
        
  5. Calculate Insurance Escrow: Two months of home insurance are typically required (in addition to the first year’s premium): ($1,000 / 12) * 2 months ≈ $167.
    6. 
        
  6. Sum the Total Costs: $4,000 (Lender) + $1,200 (Title) + $1,500 (Tax Escrow) + $167 (Insurance Escrow) = $6,867.00.
    7. 
      


      
Frequently Asked Questions (FAQ)

      

        What is the typical percentage range for closing costs in Michigan?
        

        Most buyers in Michigan can expect closing costs to fall between 3% and 5% of the loan amount, but this percentage can be higher for smaller loans or if additional prepaid items are required.
      

      

        Does the buyer pay the Michigan Transfer Tax?
        

        No, generally the seller is responsible for paying the State of Michigan Real Estate Transfer Tax (RETT) when the property is sold. Buyers, however, pay the mortgage tax if they are obtaining a loan, which is included in the “Title & Settlement Fees” estimate.
      

      

        Why is so much money needed for escrow at closing?
        

        Lenders require escrow funds to ensure that future property tax bills and insurance premiums are paid on time. The amount collected at closing is designed to ensure the account has enough funds to cover the first full payments when they become due, which often requires collecting several months in advance.
      

      

        Are attorney fees required in Michigan real estate closings?
        

        Michigan is generally considered an attorney state, but the level of involvement varies. While a title company or escrow agent may handle the final closing process, you may incur fees for legal review, which are typically covered under the flat Title & Settlement Fee estimate.
      


      
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