A Michigan Letter of Credit — First Mortgage is a type of financing used to purchase real estate in the state of Michigan. This type of loan is secured by a first mortgage on the real estate being purchased. It is also referred to as a Michigan letter of credit mortgage. The borrower must provide a letter of credit from a financial institution that guarantees repayment of the loan should the borrower default. Michigan Letter of Credit — First Mortgage comes in two different types: variable-rate and fixed-rate. Variable-rate mortgages have interest rates that can change over time while fixed-rate mortgages maintain a steady interest rate for the term of the loan. Both types of loans require a down payment and have closing costs, typically including an application fee, an appraisal fee, and title insurance. The borrower must also provide evidence of income and creditworthiness before the loan can be approved.