February mortgage update on 2nd homes from Tim Lawson
Are you considering purchasing a second home this spring? You should consider at least 20% down on your conventional mortgage:
We are seeing a little bit of a rebound with rates over the past few days but overall, they are still up quite a bit from where they were a few weeks ago. We are in the mid to upper 3’s right now on most 30 year conventional programs, whereas we were down in the low 3’s just a few weeks ago.
Another change that is getting rolled out soon by both Fannie Mae and Freddie Mac (so all 2nd home conventional loans will be impacted) is the pricing on 2nd homes. In the past, the pricing on a 2nd home has been almost the same as a primary residence except for the fact that a minimum of 10% down is required (only 3-5% down required for a primary residence). The down payment requirement is not changing, but the pricing adjustments will be changing significantly. The new pricing adjustments are tiered based on how much is being put down (the higher the down payment, the less the impact on the new pricing adjustments) but we could potentially be looking at a full percentage point on the rates for a 2nd home if only putting 10% down. Someone that may be looking in the high 3’s today on a 2nd home could potentially be looking at the high 4’s in another month or so. If any buyers are shopping for 2nd homes, they may want to share this info with them because it could impact how much they qualify for.