Fees on Second-Home Loans on the Rise in 2022!

Are you thinking about purchasing a second home on the lake in 2022? There is an important fact to consider… The Federal Housing Finance Agency introduced new upfront fees for some high-balance and second-home loans sold to Fannie Mae and Freddie Mac.

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. The new pricing framework will take effect April 1, 2022, to “minimize market and pipeline disruption,” the agency said in a press release.

Demand for second homes has gone through the roof in the last couple of years, as newly remote workers seek more space and better scenery. 

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It’s not just the pandemic, said Daryl Fairweather, chief economist at Redfin. “There is a long-term trend that we’ve seen of second-home purchases increasing,” she said. “I think part of that just goes along with wealth inequality in the rich getting richer and being able to buy more second homes.” Redfin estimates that’ll cost a typical buyer an extra $13,500 on a $400,000 home. Fairweather said regulators may be trying to get a handle on what could be an emerging bubble in the housing market.

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Demand for second homes is likely to remain high, according to Dean Tucker, a mortgage broker in Boise, Idaho. “I don’t think that it’s going to slow that market down. Second homebuyers are typically more affluent,” he said. “And if that’s the cost of getting a second home, that’s the cost.”

If you are planning to buy a second lake home this year, then be sure to account for these changes in your finances. 

Posted by Scott Freerksen “The Lake Guy”

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