Homebuyers will be paying for the much-debated two-month extension of the payroll tax passed by congress at the end of last year. The sad part about it is that buyers of Atlanta real estate will be paying a lot longer than just two months; they will be paying for 30 years.
Employees get an additional two month cut in Social Security taxes. It lowers the tax from 6.2 percent to 4.2 percent, and represents a $165 annual savings to the average employee who makes $50,000 a year. The bad part is that mortgages backed by Fannie Mae or Freddie Mac will be paying for the extension by charging an additional 0.1 percent in fees for the next 10 years. For the homebuyer purchasing a $200,000 house, this will add more than $6,000 in fees to their 30-year loan. The bigger the loan, the more you pay. Worst of all, this additional fee applies to refinancing as well.
Congress has basically just penalized millions of potential middle-class home buyers by needlessly raising the cost of buying a home. Congress has paid for a temporary payroll tax extension through an increase in guaranty fees (g-fees) charged to mortgage lenders by Fannie Mae and Freddie Mac. In other words, Congress enacted a short-term economic stimulus by taking money out of the pockets of people who need a mortgage and ultimately raising the price of homeownership for all Americans seeking loans backed by Fannie Mae and Freddie Mac.
Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev., states, “Using g-fees to fund budget gaps sets a terrible policy precedent. These fees should only be used for their intended purpose – to protect against mortgage defaults and ensure the safety and soundness of the housing finance system. The housing market is struggling to emerge from its worst downturn in decades. Placing additional burdens on home buyers will do more harm to the economy than good.”
Let us know your thoughts. Will this additional fee impact your ability to buy Atlanta real estate or an Atlanta new home.