Mortgage Refinances, Home Purchases Affected By Payroll Tax Extension
December 19, 2011
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Homeowners who refinance their properties and homebuyers who
seek out new properties will be faced with higher fees on FHA loans and other mortgages
backed by government sponsored entities beginning next year.
Earlier this month, Sen. Bob Casey (D-PA) proposed raising fees
on mortgages backed by government sponsored entities as a means to
pay for extending the payroll tax. In response to his idea, the
National Association of Realtors (NAR) and the National Association
of Home Builders (NAHB) sent him a letter stating that higher fees
unfairly target U.S. homeowners.
"With the housing market struggling to regain its footing, such
a short-sighted move would be extremely counterproductive and
threaten the fragile economic recovery," NAHB chairman Bob Nielsen
Despite the opposition of NAR and NAHB, lawmakers moved forward
last weekend with the payroll tax extension, including the mortgage
fee modification provision. Fannie Mae and Freddie Mac back about
31 million mortgages in the United States, which accounts for about
half of all home loans.
The bill calls for fees to be raised by at least one-eighth of a
percentage point from the 0.26 percent of the loan relegating to
fees last year. Republican senators anticipated higher fees would
produce between $30 billion and $40 billion in additional revenue
over the next 10 years. The Congressional Budget Office (CBO) still
has yet to analyze the long-term effects of the payroll tax
extension, including the impact on the housing market.
Prospective homebuyers and owners interested in a mortgage refinance
should monitor the developments surrounding higher mortgage fees
and get in touch with an experienced mortgage lender soon. If you
have already begun the mortgage refinance process, you may be able
to expedite lending before January 1, 2012, when the new fees are
enacted. If you weren't sure when to refinance, now
might be the ideal time.
Knowing When To Refinance From An Adjustable To A Fixed-Rate
How Can I
Prepare For A Mortgage Refinance?