Freddie Mac's weekly survey put the average 30-year mortgage rate at 6.95 percent on September 17, up from 6.76 percent the week before. That's the highest reading since January 2025, and it sits just five hundredths of a point below the 7 percent line that spooks a lot of buyers. The Federal Reserve piled on a day earlier, raising its key rate for the first time in three years and hinting that another hike could follow.
If you're eyeing a cottage in Elk Rapids, Glen Arbor or Harbor Springs, that headline number undersells what you'll actually pay. Freddie Mac builds its survey around buyers who put 20 percent down and carry excellent credit, and second-home loans almost always price higher than that. Three moves can claw back a lot of the difference without waiting for rates to drop: a seller credit, a rate buydown and a bigger down payment. They also build on the September 13 argument that fall sellers are ready to negotiate.
Start with the gap itself, using two real price points from the Aspire North REALTORS August report. The first is $450,000, the median sale price across Grand Traverse, Leelanau, Benzie, Antrim and Kalkaska counties. The second is $690,000, the median in Leelanau County, home to Glen Arbor, Empire and the peninsula towns. Grand Traverse County, which covers Traverse City and Old Mission, sits between the two at $490,000. Buyers looking near Elk Rapids, Beulah, or Honor will find lower medians, closer to $387,500 in Antrim County and $385,000 in Benzie County, so trim every number below by about 14 percent. Every payment here assumes 20 percent down, a 30-year fixed rate, and principal and interest only, so taxes and insurance will add more on top.
A $360,000 loan on that $450,000 home cost $2,219 a month at last year's 6.26 percent. At today's 6.95 percent, it climbs to $2,383, a gap of $164 a month, or about $1,970 a year. The $552,000 loan on the $690,000 home ran $3,402 a month at the old rate and runs $3,654 now, a difference of $252 a month, or roughly $3,020 a year. Stretch either gap across a full 30-year loan, and you're looking at about $59,000 extra on the first home and $91,000 extra on the second.
Here's the part the headline skips. Fannie Mae tacks on an extra pricing fee to most second-home loans, and lenders pass that cost along as a higher rate or as points at closing. The reason is simple: second homes fall behind on payments more often than the house you actually live in. Lenders figure a stressed borrower stops paying for the lake cottage before they stop paying for the place with the mailbox and the school bus stop, and they charge for that hunch. Nobody has yet talked a loan officer into a discount by describing the sunset off the deck.
Quotes for second homes commonly land a quarter to a half point above what a primary residence would get. Take the top of that range, 7.45 percent, which looks realistic given that Mortgage News Daily's daily index ran above 7 percent all week while Freddie Mac's number averages a full week of data. At 7.45 percent, the payment hits $2,505 on the $450,000 home and $3,841 on the $690,000 home. Compared with last year's headline rate, that's an extra $286 and $438 a month, or roughly $3,430 and $5,260 a year.
Waiting sounds smart until you list what it requires. Rates have to fall, and the Fed just tightened instead. Bright MLS chief economist Lisa Sturtevant said the move makes it very likely mortgage rates stay at or above 7 percent. Prices aren't waiting either. The five-county median sale price climbed 3.6 percent in a year, from $434,500 to $450,000, so a buyer sitting on the sidelines is chasing a rate and a price at the same time. Rates follow no calendar, and waiting for them to drop is a lot like waiting for the ice to leave Grand Traverse Bay. Everyone's got a prediction, and the bay ignores every one of them.
The August numbers back up that September 13 argument too. Homes across the five counties took an average of 72 days to sell, and closed sales dropped 5.4 percent from a year earlier. A seller sitting on that much time will often trade a concession for a signed offer, and each move below turns that willingness into a lower monthly payment.
The first move is the seller credit, where the seller covers part of the buyer's closing costs or funds a rate buydown right at the closing table. Fannie Mae caps these credits based on the size of the down payment. On a second home, the cap starts at 3 percent for buyers who borrow more than 90 percent of the price. It climbs to 6 percent for buyers who borrow between 75 and 90 percent, and to 9 percent for anyone who borrows 75 percent or less. A buyer putting 20 percent down lands in the middle tier. Even a modest 3 percent credit works out to $13,500 on the $450,000 home and $20,700 on the $690,000 home.
Sellers often prefer a credit over cutting the price, because the sale price stays where the listing put it, which protects what the next appraiser sees on comparable homes nearby. The credit can't cover the down payment, and it can't exceed the buyer's actual closing costs, and a seller-funded buydown counts toward the same cap. Buyers planning to rent the place out most of the year should know investment-property loans cap credits at just 2 percent.
The second move is the rate buydown, and it comes in two flavors. Lenders sell the permanent version as discount points. Each point costs 1 percent of the loan and typically trims the rate by a quarter point, according to Bankrate, though the CFPB notes the exact trade varies by lender. On the $360,000 loan, one point costs $3,600 and lowers the payment by about $61 a month, so it pays for itself in roughly five years. Owners planning to keep a cottage for a decade or more clear that bar easily, while owners who might sell in three years probably won't. Three points would cost $10,800, comfortably inside a $13,500 seller credit, and would knock about $182 a month off the payment if the lender grants the usual quarter point per point. Since the seller foots the bill, the buyer breaks even the day they close.
Lenders call the temporary version a 2-1 buydown, and Fannie Mae allows it on second homes. It drops the rate by two full percentage points in year one and one point in year two. On the $450,000 home at 7.45 percent, that payment runs $2,033 in year one, $2,264 in year two, and $2,505 after that, at an upfront cost near $8,560. The relief runs out, so this plan fits buyers who expect to refinance soon, and this week's Fed move makes that bet a little shakier.
The third move takes no negotiating at all. Bumping the down payment from 20 percent to 25 percent adds $22,500 on the $450,000 home and shrinks the loan to $337,500. At 7.45 percent, that trims the payment by about $157 a month. On the $690,000 home, an extra $34,500 shaves off roughly $240 a month. Lenders also tie second-home pricing to how much of the price a buyer borrows, so a bigger down payment can lower the rate itself, not just the loan balance. Fannie Mae sets the floor at 10 percent for a conventional second home, so 20 percent already clears the minimum with room to spare. Pushing to 25 percent can bump the loan into a cheaper pricing tier altogether.
Cash has a cost too, and cottages eat cash. Money that goes into the down payment can't cover October dock removal, a new roof on the guest cabin, or the tax bill that shows up whether or not anyone visited in August. Emptying your savings to shrink the loan trades a smaller payment for a thinner cushion, and Northern Michigan winters have a way of testing that cushion.
The moves work best stacked together. Say a seller funds three points and the buyer puts 25 percent down. On the $450,000 home at 7.45 percent, the payment drops to about $2,178, which actually beats last year's $2,219 at 20 percent down. The $690,000 home falls to about $3,339 against $3,402. Those numbers assume the lender grants a quarter point per point and the buyer has the extra cash on hand, and they'll shift if a lender prices things differently. If rates fall next spring, a refinance can trim the payment even further. A bigger down payment keeps paying off after a refinance, while points bought for today's rate stop mattering once that rate is gone.
Buyers shopping the priciest waterfront, on Old Mission and the Leelanau Peninsula or along Little Traverse Bay in Petoskey and Harbor Springs, should check one more thing. In most of the country, Fannie Mae and Freddie Mac will only buy loans up to $832,750 for a single-family home in 2026. At 20 percent down, that limit works out to a home price near $1.04 million. Cross that line and the loan becomes a jumbo loan, priced however that particular lender feels like pricing it, which means the Freddie Mac headline tells you even less about your real cost. Ask the lender which category your loan falls into before comparing offers.
Before Freddie Mac posts its next reading on September 24, ask a lender for two written Loan Estimates on the same day, and tell them to price both as a second home. Request one at 20 percent down with a seller-funded buydown and one at 25 percent down with no credit, then compare the monthly payments and the cash due at closing side by side. The CFPB has a plain guide to how points and lender credits show up on those forms. This column offers general information, not personal advice, so run every figure past a loan officer before you sign anything. The lake will look the same at 6.95 percent as it did at 6.26. Only the payment has changed, and this fall, buyers have three real ways to take a good chunk of that change back.
Northern Michigan Property Insider covers real estate, ownership, and property strategy across Grand Traverse, Leelanau, Antrim, Benzie, Charlevoix, and Emmet counties.