Four Financial Tips for Buying a Second Home

In an effort to tamp down soaring inflation, the Fed also said it would begin…

In an effort to tamp down soaring inflation, the Fed also said it would begin to shrink its balance sheet of bond holdings, which could tighten bank lending for mortgages and other loans.

The average rate for a 30-year fixed-rate mortgage was 4.16 percent on March 17, up from 3.09 percent a year ago, according to Freddie Mac, the mortgage finance giant. Want to know the rate you might get? The Consumer Financial Protection Bureau has a handy online tool to help potential home buyers determine what mortgage rate they can expect in every state.

Mortgages typically come with upfront costs, including appraisal fees and pro rata property taxes. Most are standard, but buyers looking to reduce their closing costs can negotiate some fees with lenders on third-party services, like pest inspections.

One upfront cost is about to jump: The Federal Housing Finance Agency said in January that, in an effort to support affordable housing, it would increase the upfront fees next month for mortgages on a second home sold to Fannie Mae and Freddie Mac by as much as 3.9 percent.

Under the plan, a buyer with a $300,000 mortgage and loan-to-value ratio of 65 percent, for example, will pay an additional $4,875, according to the National Association of Home Builders, which has opposed the plan, saying it will increase the cost of homeownership.

Condos and other planned developments typically have a homeowners association that maintains the finances of the community through monthly maintenance fees, which are often based on the size of the complex and the type of amenities that are covered. Banks will consider HOA fees when determining the size of a mortgage, so higher fees could leave a borrower with a smaller loan.

Buyers should find out what the fees are and whether the association has money stashed in a rainy-day fund, said Bryan Sereny, Mr. Hernandez’s partner at Douglas Elliman. And they should get disclosures of any upcoming assessments, he added.