Although the Obama administration has promised that the extension of the payroll tax could save the average working American family about $1,000 per year, it may have additional negative consequences on those individuals planning on buying a home in Utah in 2012.
Part of the payroll tax extension, approved last weekend by the Senate, raises the fees charged on home mortgages backed by Freddie Mac, Fannie Mae and the Federal Housing Administration (FHA). While this change directly affects banks and other lenders, these higher fees will eventually be passed on to homeowners. Experts anticipate buyers will be required to pay several thousand more dollars for 30-year mortgages.
The fee increase is relatively nominal – likely about one-tenth of a percentage point pending Congressional Budget Office (CBO) approval – but it could generate about $35 billion in revenue over a 10-year period, according to CBO estimates. Last year, fees on mortgages backed by government sponsored entities averaged about 0.26 percent of the loan's value.
When the idea of raising mortgage fees to offset the payroll tax extension was originally proposed at the beginning of this month, the National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) expressed their vehement disapproval in a letter addressed to Sen. Bob Casey (D-PA), who sponsored the bill.
"Congress is essentially proposing to raise taxes on millions of potential homebuyers in order to pay for a payroll tax cut and other non-housing legislative initiatives," NAHB chairman Bob Nielsen said in the letter.
If you are seeking home loans in Utah, you should contact an experienced real estate expert who can facilitate a mortgage filing at a low cost. While it is likely too late to begin the financing process with a Utah mortgage company before the mortgage fees increase next year, this professional could be an important ally as you try to purchase a home.
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