FHFA Announces Upfront Fee Adjustments for High Balance Loans and Second Home Loans

New Fees For Some Colorado Home Buyers

If you’ve been considering purchasing a second home in Colorado, you may want to do so sooner rather than later. That’s because the Federal Housing Finance Agency (FHFA) has announced they will be increasing fees on 2nd homes and high-balance home loans beginning April 1. This means that interest rates and closing costs will be significantly higher for borrowers in these categories.

Why Are Fees Increasing?

According to the FHFA, fees are increasing for second homes and high-balance home loans as a way to provide “equitable and sustainable access to homeownership.” Basically, that means that these additional fees will be used to help reduce expenses and provide access to more first-time homebuyers and lower-income earners who are trying to purchase a home. First-time homebuyers in Colorado and across the country are having an extremely difficult time trying to find affordable housing. Inventory is low, and the demand for housing is sky high, making prices increase rapidly in the last year. 

Increasing fees for borrowers who already own a primary residence and are either taking out a mortgage on a 2nd (or 3rd of 4th) home or one considered a high-balance loan will not impact housing accessibility. The plan is that the additional fees can be used for down payment grants and similar programs. 

Which Colorado Home Buyers Will Be Affected?The increased fees will impact borrowers looking to purchase or refinance a vacation home, or any type of 2nd home, as well as those borrowing what is considered to be a high balance. According to the FHFA, High balance loans will see an increase of 0.25 percent and 0.75 percent in upfront costs. High-balance home loans are those over $647,000. For second home loans, upfront fees will increase between 1.125 percent and 3.875 percent, tiered by loan-to-value ratio.  

The demand for vacation homes in Colorado and homes above $647,000 has increased considerably in the last year. Home values in Colorado have increased to a point where it can be a challenge to find anything less than what would be considered a high-balance loan. The bottom line, it is going to cost you a lot more money to purchase or refinance if you wait until after April 1st. 

Lock-In Your Rates In Now Before It’s Too Late!

While April may seem to be really far away, in order to make sure your refinance or new loan is closed by the deadline, you will need to lock in by Valentines Day, which is only a few weeks away. Give us a call or message so we can discuss your options and get the process started today. This will save you thousands of dollars.