Uncle Sam Seeks Mortgage Tax as Revenue Generator

Need Some Money Uncle Sam?  How About Taxing Mortgages?!?!

If this one doesn’t get you a bit irate, I’m not sure what
will.  Did you know that Congress passed
a law to tax new mortgages for the next 8 years to help offset the cost of a
2 month extension to the payroll tax credit?

Here is the quick math:
the average American will have a total benefit of about $356 over this
two month period.  This is the absolute
maximum for incomes at or above $106,800.
The benefit to lower income workers will be much less.

In order to pay for this 2 month extension, Congress has
added a tax of 10 basis points to all Government Sponsored Enterprise (GSE)
Fannie Mae and Freddie Mac loans that are originated through 2020.  This 10 basis points translates to an
increase in the actual rate of those mortgages by about .125% to .25%.

This increase in rate amounts to approximately $5400 to over $10,000 in increased cost
to a new borrower of a mortgage at $200,000.  Many people are
having a hard time justifying that type of math – a few hundred dollars in
savings over two months covered by thousands in what basically amounts to a
new mortgage tax.

This increase in the fee to the GSE’s is scheduled to go
into effect April 1, 2012 however most loans being originated right now are
already subject to these increases.
Another proposal that is in the works would allow underwater borrowers
to refinance their mortgages using the Government run FHA program.

A similar tax is expected on all FHA loans soon if this passes through Congress.

I believe that this is a sign of things to come for the
mortgage market.  The Federal
Government sees incremental charges on mortgages adding up to huge revenues
to the Federal coffers.  Unfortunately,
this runs counter to the short term mission of keeping rates low so that more
people are able to buy or refinance to save money which will help stimulate
the economy.  Once a revenue source is
seen as a ‘panacea’ it becomes an area of focus and I hope that the
Government doesn’t go overboard in trying to raise revenue by stalling the
very housing market that is so heavily relied upon to help move our economy
forward.  If you are considering buying
or refinancing your home, it may well be worth investigating those options
now . . . before Uncle Sam makes it a much less beneficial experience.

Right now, home loan rates still remain near some of the
best levels we’ve seen this year, and it’s important to take advantage of
these levels while they remain. If you have been thinking about purchasing a
home or refinancing, call or email me to learn more about why now is a great
time to benefit from today’s historically low rates. Or forward this
newsletter on to someone you know who may benefit.

 

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