Demand for second homes has been steadily increasing, a trend that likely isn't going away soon. The FHFA is applying some targeted increases to upfront fees in an effort to support their mission of facilitating equitable access to homeownership and strengthen the safety and soundness of Fannie Mae and Freddie Mac.
Today's Housing Market: HOT
Today's real estate market continues to be hot and highly competitive. Perhaps with the continued ability to work remotely, people are looking for new scenery, a new town or a peaceful home away from home. Finding a home and having your offer accepted is likely to be a bit stressful for even the most seasoned home buyers. Those purchasing their first home are likely to have an even bigger challenge entering the market - where many competitors can purchase with cash or can afford to negotiate above the asking price.
FHFA Announcement: Upfront Fee Increases
Last week, in an effort to support access to homeownership and affordable housing, the Federal Housing Finance Agency (FHFA) announced some targeted increases to the upfront fees for second home loans and some high balance loans. The new fees will go into effect beginning April 1, 2022.
"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. Today's action represents another step FHFA is taking to strengthen the Enterprises' safety and soundness and to ensure access to credit for first-time home buyers and low-and moderate-income borrowers." - Sandra L. Thompson, FHFA Acting Director
Loan Fees to Increase April 1, 2022: Secondary and High Balance Home Loans
Fee increases on second homes will range from 1.125% to 3.875% of the loan amount, tiered by loan to value ratio, LTV. This means the closer your loan amount is to yours home value, the closer your fees will be to 3.985 percent. What amount would this fee equate to? On a secondary home purchase of $400K, you might be looking at an additional up front fee ranging from $4,500 to $13,500.
High balance loans - even for primary homes, will also have an upfront fee increase this April. High balance loans are mortgages originated in certain areas that have a median home value above the baseline conforming loan limit ($647,200). These fees will range from 0.25% to 0.75% of the loan amount, also tiered by LTV. There is an exception to the high balance loan fee for first time homebuyers in high cost areas with incomes at or below 100 percent of the area median income.
Looking to purchase a Second Home: Don't delay!
The deadline is approaching and you can save yourself thousands or tens of thousands by making your purchase prior to Apirl 1, 2022.
Call Simplicity to discuss your options and get Pre-Approved today!
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