Buying an investment property or second home will soon cost more due to new upfront fees for second home loans by the Federal Housing Finance Agency. Prospective owners who are finally looking to buy that vacation home in the Poconos or the Jersey Shore are encouraged to seek advice on how fees will impact their purchases.

“The demand for second homes is still incredibly strong, whether it’s the beach house or the mountain home or a ski lodge property,” said Jeffrey Ruben, president of WSFS Mortgage in Wayne. “He was driven by the work-from-home model that many companies have adopted out of necessity due to the pandemic.”

According to Ruben, the situation has contributed to a change in the purpose of the house – not just a retreat or a place to raise a family, but a place where one can operate and work productively.

“A lot of people are now stepping back and thinking, ‘If I have to work from home, maybe I can work in an environment that I’ve always enjoyed,'” he said.

As the oldest locally-run bank in the region, WSFS has seen more than one pandemic in its history, having also persevered through the infamous 1918 Spanish flu pandemic.

Jeffrey Reuben.

Like the bank itself, WSFS Mortgage prides itself on being customer-focused and transparent. With a wide range of products, it does everything from standard purchases and refinances to FHA and VA loans, and rural USDA loans. The unit ended 2021 just short of originating $1 billion in mortgages.

Many of these loans were for the purchase of a second home, a target of recently announced new FHFA fees for loans sold to Fannie Mae and Freddie Mac. For second home loans, the initial fee will increase between 1.125% and 3.875%, depending on the loan-to-value ratio. According to a statement from the FHFA, the fee increases are another step it is taking to facilitate equitable and sustainable access to homeownership for first-time buyers and low- and middle-income buyers, and to improve its capital position. regulations over time. The rates will come into effect on April 1.

“I think it was their way of saying they weren’t going to exit the second home market, but priced it so it wasn’t as attractive,” Ruben said. “It will help them in their main mission, which is to help Americans buy their main house, the one they will live in, not the one where they will only spend 10 weeks a year.”

While Ruben still sees this as a great time to buy a second home, he suggests buyers who can act quickly will benefit the most because for every week a buyer waits, the more expensive the property will become. And with a second home being a luxury rather than a “necessary” purchase, saving for it has never been more critical. For example, buyers looking to buy a second home at 80% (i.e. 20% down payment), 85% or 90% will have more difficulty today.

“We’ve historically been successful and thoughtful in structuring loans, and we might start looking at second home purchases where we can get a little creative, structuring them where we can leverage the most advantageous financing,” said Reuben. “But the cost of financing is only one aspect. The other is the actual cost of the home, and it seems the cost of the home is outpacing the increased cost of finance, so it’s a good idea to act sooner rather than later. If a buyer is prepared and has the ability to make a bigger down payment, that will be the key to winning a deal and making it affordable and effective.

WSFS Mortgage always encourages its clients to do their homework on their financial situation beforehand, making sure their financial situation is in order before seeking that second home, especially in a market so competitive that sellers do not want hear about things like mortgage contingencies. .

“We encourage buyers to speak to us before they start this home search, because the more we prepare with them, particularly in terms of qualifying for a certain mortgage and the amount they will need, the better they will be able to look. . a home with more confidence and become a successful bidder,” said Ruben. “That’s where we help people. We have clients who thank us again and again for getting them to think about that part first, leading them to successfully buy the home they wanted.

Learn more about the WSFS Mortgage.