The Payroll Tax Extension was funded by new fees on FHA, Fannie Mae, and Freddie Mac mortgages. To avoid the new fees you will want to get your mortgage before January 1, 2012. This was signed into law under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The plan is to stimulate the
national economy by lowering taxes.
This does not apply to Existing Mortgages.
Quit Waiting for Rates to drop further, because Fees are going up…
My first reaction was, why are they putting more burden on the struggling housing market? As I thought further about this, I am beginning to think this not such a bad thing. I’ll try to explain my logic; these new fees are only on FHA, Fannie Mae, and Freddie Mac mortgages. These new fees will likely put consumer demand onto private mortgages which I believe would help out the real estate market. Or at least it will make the private mortgages a little more competitive.
How much are these new fees:
From The Mortgage Reports:
From Title IV of the bill’s final form, these costs will be recouped via the mortgage market. The section is titled “Mortgage Fees And Premiums“. In it, Congress instructs Fannie Mae and Freddie Mac, and the FHA to take following specific measures :
- Fannie Mae and Freddie Mac : Increase loan guarantee fees by 10 basis points or more versus current levels, and do not decrease other costs to compensate
- FHA : Increase mortgage insurance premiums by 10 basis points
The extra fees amount to roughly $10 per month per $100,000 borrowed.
- Home buyers in 2012 to help pay for payroll tax cut bill (usatoday.com)
- Payroll tax cut bill boosts cost of new mortgages (mysanantonio.com)
- Mortgage Fees Would Rise Under Payroll Tax Cut Deal – Fox News (foxnews.com)