The Sky is NOT Falling!! (2nd home loans, LLPAs, interest rates)
NO! The cost for the interest rate has increased but the second home loan is not going away, and it is still a minimum of 10% down.
FNMA put in place loan level pricing adjustments (LLPAs) on second home loans and investment properties as many people were starting to invest. This means, they enforced a cost to obtain a certain interest rate.
When COVID hit, the interest rates plummeted and banks were able to borrower money at a really low rate and therefore, offering you really low rates on mortgages. There is now a lot of debt out there and the Fed is trying to curb inflation by making the interest rates a little higher. This means that less people will borrow and therefore, help curb the inflation.
Not at all! Be an educated buyer first and get your loan originator to do the math with you. The difference between a 5.5% interest rate and a 6% interest rate can be as little as 100.00. Be educated in your journey to build generational wealth!