Who hasn’t thought of owning a place they can visit to find nature, make family memories, or escape for a recharge from our fast-paced world? Fortunately for us, Northern and Western Michigan are some of the best areas in the Midwest for such family vacation homes (referred to as Second Homes in the mortgage world).
When it comes to financing second homes, there’s a myth that such a mortgage requires a significant down payment and higher interest rates than for a primary residence. You’ll be glad to know that conforming loans require as little as 10% down and until recently had very little difference in rates and fees compared to your primary home’s mortgage. The important part here is “until recently” because significant changes have been made.
When it comes to home financing, you’ve probably heard of Freddie Mac and Fannie Mae. These two Government Sponsored Enterprises create the guidelines that mortgage lenders must follow if they want access to Freddie/Fannie loan programs. They also determine if additional fees are required on certain properties based on the level of risk for those loans.
As of 4/1/2022, Freddie and Fannie increased upfront fees on second home loans between 1.125 percent and 3.875 percent, tiered by the loan-to-value ratio (how large your down payment is). This means that a $200,000 loan would require between $2,250 to $7,750 in additional fees, just because it’s a second home.
Because of the high demand for second homes, West Shore Bank came up with a solution that requires as little as 10% down, provides the stability of a fixed-rate mortgage, and has competitive interest rates without charging the new Freddie/Fannie fees.
If you’re in the market for that magical second home, this is great news for you. Give your local Mortgage Loan Officer at West Shore Bank a call today to see how you can take advantage of our second home loans and have a friendly, professional experience with a community bank that cares. Visit us at one of our convenient locations in Ludington, Hart, Onekama, Manistee, Traverse City, Scottville, or Frankfort, MI.
For more about buying a second home, check out our three-part series, Key Factors to Consider When Buying A Second Home:
- Why Buy A Second Home in Michigan
- Where to Buy a Vacation Home in Michigan: Top Lakeshore Destinations
- Things to Consider Before Buying A Second Home
All loans are subject to credit approval