From our lender partner, Travis Johnson:
The FHFA (Federal Housing Finance Administration) announced targeted increases to second home loans in 2022. The new fees will go into effect for deliveries beginning April 1, 2022. Once a loan closes it typically takes a lender 2 weeks on average to sell it to Fannie Mae or Freddie Mac. This means in order to get the best rates on a second home, you would need to act fast and lock in your interest rate by mid-February and close mid-March. Many lenders are already building the fees into their interest rates.
The fee increases for second homes are significant. Upfront fees will increase between 1.125 percent and 3.875 percent, tiered by loan-to-value ratio. Assuming a homebuyer puts down the minimum 10% down payment on a second home, the fee increase would be 3.875% of the loan amount. So for a $100,000 loan this would equate to $3,875 in additional closing costs. If the prospective homebuyer doesn’t want to pay this fee out of pocket, they can opt for a higher interest rate where the lender builds the fees into the interest rate, thus reducing the out of pocket closing costs.
The Johnson Mortgage Team
Travis Johnson | NMLS 170196 | GRMA 28835
Partner | Senior Mortgage Loan Originator
Cell: (404) 786-5859