Things to Consider When Buying a Second Home In Lake Tahoe

April 18, 2022

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Should I buy a second home in Lake Tahoe?

If you're considering buying a vacation home or a second home in Lake Tahoe, you're making a wise decision. It's so beautiful here! This area is perfect for those who love the outdoors, with its stunning scenery and abundance of activities to enjoy. Before you decide on your next home, apply for a home loan, and finalize your purchase, you should know a few things about the real estate market here. Keep reading to learn more!

FHFA hikes fees for high-balance and second-home loans

You'll remember from our recent blog post that the FHFA recently announced and implemented an increase in the guarantee fees for high-balance and second-home loans. This is significant because it will make these loans more expensive for borrowers. With that said, the change to interest rates and fees isn't currently impacting Jumbo loans in the same way, so we advise securing a loan amount above $675,400 (if that's within your target price range) for a second home to avoid the tough-to-avoid higher costs. Just to be clear, that amount is for South Lake Tahoe, CA, and the amount for Zephyr Cove, NV (or anywhere on the NV side) is $647,200.

Most people don't realize that the interest rate on their home loans has a significant impact on their budget, so we're here to help you find the best mortgage possible for your unique financial situation. Here are three reasons why it's crucial to get a low-interest rate on your home loan:

Save money each month on your mortgage payment.
Pay less interest over the life of your loan, which can save you thousands of dollars.
May allow you to qualify for a larger loan amount, which can help you purchase a more expensive home.

Buying a vacation home in Lake Tahoe, you must prove that you can afford two mortgage payments at once

When purchasing a second home in Lake Tahoe, you must prove that you can handle the burden of two separate mortgage payments (one at your primary residence and another for your new property). The lakefront property market is very competitive, and lenders want to ensure that you are a serious buyer.

The best way to prove that you can afford two mortgage payments is to show that you have the cash on hand to make a down payment and cover closing costs. You can also provide bank statements or investment account statements that show that you have the financial resources to cover two mortgage payments. If you are self-employed or have other income sources, you may need to provide additional documentation to prove your ability to make two mortgage payments. But if you can provide this documentation, it will increase your chances of being approved for a loan to purchase a second home in Lake Tahoe. One important item to note is that you are not supposed to rent out a second home more than 14 days in the year for refinancing purposes, so keep that in mind as well.

Larger down payments can reduce the hit for your second home in Lake Tahoe

One of the benefits of owning a second home is that it can be an excellent investment. If you're considering purchasing a second home in Lake Tahoe, you may be wondering how much money you should put down. While there are various factors to consider, one general rule is to aim for a 20% down payment. You'll avoid paying private mortgage insurance (PMI), which can add hundreds of dollars to your monthly payments. Additionally, a larger down payment can help you secure a lower interest rate, saving you even more money over the life of your loan. While you can do as little as 10% down on a second home, due to the massive pricing hits for second homes and high balances, it's better to put 20% or more down.

Of course, every situation is unique, so speak with Maggie and the Greenfront team to determine what's best for you. Our loan or refinance offerings include traditional Fixed-Rate Mortgages, Jumbo loans, VA loans, USDA loans, Reverse Mortgages, and so much more. Don't hesitate to reach out to learn more.

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A Closer Look at Core Inflation's Grip on Mortgage Rates

February 21, 2024

Explore how core inflation impacts mortgage rates and what it means for Lake Tahoe homebuyers in 2024.

Your Guide to 2024 Mortgage Rates: When Will Rates Finally Come Down?

February 2, 2024

Now that 2024 is here, let's talk about something on everyone's mind: mortgage rates. Last year was a rollercoaster, and we're all wondering where rates are headed next. Understanding these trends is crucial if you're dreaming of a cozy cabin or a lakeside retreat here in our beautiful Tahoe area. We’re here to walk you through what the market suggests will happen with 2024's mortgage rates and what it means for your home buying, selling, or refinancing plans. Let's work together to navigate the complexity of this high-interest mortgage market and make your Tahoe home dreams a reality! Recent Trends in Mortgage Rates – A Quick Recap 2023 was quite the year for mortgage rates , hitting highs we haven't seen in a while. But as we entered the new year, things started looking slightly different. Rates began to cool off, and we're all feeling a bit of relief. This shift is especially interesting for those of us in the Lake Tahoe area. Whether you're thinking about buying that dream home by the lake or refinancing your current spot, these rate changes are big news. Let's take a quick look back at how we got here and what it might mean for our local housing market. Start of 2023: A Steady Descent Early Year Trends: The year kicked off with a gradual rate decrease, starting from 6.48% in January and slightly dipping over the following months. Signs of Stability: This period hinted at a stabilizing market, offering a glimmer of hope for buyers and sellers in the Tahoe area. Mid-Year Surge: Rates Climb Summer Spike: As summer approached, the rates started climbing, peaking at a daunting 7.79% in October — the highest point in 2023. Market Response: This surge impacted the housing market, with potential buyers re-evaluating their plans amid these rising costs. Year-End Relief: A Downward Trend Cooling Off: The end of the year brought some relief , with rates gradually declining to close the year around 6.61%. Market Rebound Hints: This rate decrease started breathing life back into the housing market, stirring interest among potential homebuyers again. 2023 fluctuations in the mortgage market impacted the decisions of buyers and sellers throughout California, Nevada, and the rest of the country. So, we recommend keeping an eye on the Fed’s plans for interest rates for this year. By understanding trends in the market, you’ll be able to plan your next move in the real estate world much more effectively. Federal Reserve's Role and 2024 Mortgage Predictions The Federal Reserve's decisions have a notable impact on mortgage rates. In their December 2023 meeting , their move to pause rate hikes marked a change in the economic climate. To combat inflation, they’ve implemented a strategy involving gradually reducing its substantial balance sheet, which exceeds $7.7 trillion. Specifically, the Fed plans to decrease its holdings by allowing up to $60 billion in Treasury securities and $35 billion in agency mortgage-backed securities to mature monthly without reinvestment. This approach is part of the broader economic measures to stabilize inflationary trends. What this means for you as a homebuyer: The Fed's actions could lead to more stable and potentially lower mortgage rates, making it a more favorable time to consider purchasing a home. Together, we'll explore what this means for mortgage rates in 2024, especially for those in the Lake Tahoe area. Federal Reserve's Influence on Mortgage Rates Rate-Hike Pause: This decision in late 2023 suggests a shift towards stabilizing the economy. Indirect Impact: The federal funds rate indirectly affects mortgage rates. This pause is expected to bring some predictability to home financing. 2024 Mortgage Rate Forecasts Analysts predict a stabilization or slight decrease in rates, a positive sign for borrowers. Predictions suggest rates could stay within the 5.5% to 7% range, a decrease from 2023's highs. Fannie Mae projects ~7% rates throughout Q1 with a steady decline throughout the year as home sales and mortgage originations slowly recover . Local Impact in Tahoe: Such trends could invigorate the real estate market in Tahoe, benefiting both buyers and sellers. Understanding these predictions and the Fed's role is essential for anyone planning to buy, sell, or refinance in the Tahoe region in 2024. When to Refinance Home Loans: Is 2024 the Right Year? Trying to figure out when to refinance a home loan? We can help you navigate that process. Deciding whether to refinance your home loan in 2024 hinges on several factors, including the trajectory of mortgage rates, your current financial situation, and long-term housing plans. With predictions of rates stabilizing or slightly decreasing, 2024 could present opportune moments for refinancing. Assessing Mortgage Rates: Monitor the rates throughout the year. A rule of thumb is to consider refinancing if you can secure a rate ~1% lower than your current rate. Personal Financial Health: Evaluate your credit score, debt-to-income ratio, and overall financial stability. These factors will influence your eligibility for favorable refinance rates and help streamline the approval process . Long-term Goals: Think about how long you plan to stay in your home. Refinancing usually makes the most sense if you intend to stay long enough to recoup the closing costs through the savings gained from a lower interest rate. Market Dynamics: Keep an eye on the Lake Tahoe housing market. Local real estate trends can affect both the feasibility and advantages of refinancing your home loan. Keep in touch with your mortgage broker so you can always make the best financial decisions possible for you and your family. While 2024 might offer promising conditions for refinancing, it’s essential to consider your personal circumstances and the broader market context. A Look Ahead at 2024's Mortgages in Lake Tahoe Our recommendation on everything discussed in this article, especially for our Lake Tahoe region, is to be cautiously optimistic. The anticipated stability in mortgage rates should be a positive signal for both the California and Nevada sides of Lake Tahoe. Potential homebuyers might find more predictable and slightly more affordable borrowing conditions, opening up more desirable purchasing or selling windows for the first time in a few years. For homeowners thinking of refinancing, this also could be your year to lock in a better rate. If you're considering your mortgage options or have questions about financing or refinancing in the Lake Tahoe area, reach out to Maggie for any guidance or information you need — let's make your Tahoe home dreams a reality in 2024!