Second Home Purchases Are Becoming More Expensive

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For those in the market for a second home, costs are going up even more, thanks to higher fees coming in a few month

The Federal Housing Finance Agency (FHFA) announced this week it will increase fees on certain home loans starting Apr. 1, 2022. These new upfront fees will affect high–balance and second home mortgages sold to Fannie Mae and Freddie Mac.

What does this mean?

Upfront fees for high balance loans will increase between 0.25% and 0.75%, tiered by loan-to-value ratio. For second home loans, the upfront fees will increase between 1.125% and 3.875%, also tiered by loan-to-value ratio. 

Loans in some affordable programs — including HomeReady, Home Possible, HFA Preferred and HFA Advantage — will not be subject to the new fees. First-time homebuyers in high-cost areas whose incomes below 100% of the area median income will also be exempt from the new high-balance upfront fees, although only a small number of those borrowers seek second homes and high-balance loans.

Demand for second homes has gone through the roof, as newly remote workers seek more space and the opportunity to have a change of scenery.

In a statement, FHFA Acting Director Sandra Thompson said the fee increases are another step FHFA is taking to both strengthen the government-sponsored enterprises’ safety and soundness, and ensure access to credit for first-time homebuyers and low- and moderate-income borrowers.

“These targeted pricing changes will allow the enterprises to better achieve their mission of facilitating equitable and sustainable access to homeownership, while improving their regulatory capital position over time,” said Thompson.

If you’re considering investing in a second home, now is the time and our team of realtors is here to help. Contact us today (757) 871-2075.