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Looking to Buy a Second Home? Jump in Now Before Rates Go Back Up in April

There will be rising costs for second home loans starting April 1, 2022. The FHFA (Federal Housing Finance Agency) recently announced that they will be increasing fees on specific home loans, including higher upfront fees on some high-balance and second-home loans that are sold to Fannie Mae and Freddie Mac. These fees will increase the interest rates for borrowers on the above-mentioned loans.

What does this mean for you? If you are planning on buying a second home, or if you plan to buy a home with a high balance loan, now is the time to make that purchase before the fees are implemented in April to save money.
According to the FHFA, “In April, upfront fees for high balance loans will increase between 0.25 percent to 0.75 percent, tiered by loan-to-value ratio. Fannie Mae and Freddie Mac refer to these mortgages as high balance loans and super conforming loans, respectively. For second home loans, upfront fees will increase between 1.125 percent to 3.875 percent, tiered by loan-to-value ratio”.

When the FHFA announced the upcoming added fees on second home and high balance loans on January 5, 2022, the “NAHBNow” explained that, “[U]nder the plan announced today, the buyer of a second home with a $300,000 mortgage loan amount and loan-to-value ratio of 65% will pay an additional fee of $4,875 if their mortgage is acquired by Fannie Mae or Freddie Mac. Prior to the effective date of today’s announcement, the same buyer would pay no additional fee for the comparable mortgage”. You can read more on the details by following this link.

If you are looking to purchase your first home, and you qualify for affordable housing, the existing pricing for certain affordable housing programs remain the same and won’t be affected by the increased interest rates on second home purchases and high balance loans. The increasing costs for second homes and high balance will, in effect, assist the Enterprises in increasing affordable homeownership opportunities for first time home buyers. Follow the link here for more information regarding the upcoming fees and the increased opportunities for first time homebuyers in the ever-changing housing market.

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