If You were Planning to buy or REFI a 2nd Home in 2022, The time to ACT is NOW!

It may save you money to finance now!

The Federal Housing Finance Agency (FHFA) recently announced increases to upfront fees for certain high-balance and second-home loans. The changes will go into effect on April 1, so if you’ve been thinking of getting a new loan, we recommend you act now.

What are upfront fees?

Upfront fees are premiums added to the cost of a loan to account for higher risk scenarios. Though the name implies they are paid “up front” when the loan is initiated, they are more typically reflected in the interest rate you pay.

How much will this cost?

The exact amount depends on your loan to value ratio (LTV) – the amount of the loan as a percentage of the property’s value. A higher LTV will incur a higher fee, as it represents a greater risk. The FHFA is imposing fees ranging from 0.25% to 0.75% for high-balance loans and 1.125% to 3.875% for second-home loans. As an approximate example, a fee of 0.75% will often translate to a mortgage rate that’s 0.25% higher.

How do I know if the new fee impacts my purchase or refi?

Generally speaking, the fee structure will apply to all second-home loans (homes not used as a primary residence).

High-balance loans (offered in areas with elevated conforming loan limits) will be impacted unless they are part of certain protected programs, such as HomeReady or Home Possible, or for certain first-time homebuyers in high-cost areas.

The fees apply to loans sold to Fannie Mae or Freddie Mac, which account for the majority of mortgage loans in the U.S. Privately held mortgages will not incur the fees.

If you’re planning a purchase or refinance in 2022, acting early before these fees kick in can potentially save you thousands over the life of your loan.

fees chart

Please reach out to learn more. We're here to help.

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