Benchmark Realty LLC logo
Benchmark Realty LLC logo

Back To Blog

Lock Your Mortgage Rate : New Loan Fees Expected Within Days

Payroll tax fees for new loansStarting soon, nearly all home buyers and refinancing households throughout TN and nationwide will pay higher mortgage loan fees. Congress has made it law.

13 months ago, as part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Congress enacted a one-year cut to FICA payroll taxes.

FICA stands for Federal Insurance Contributions Act. Taxes collected under FICA fund such programs as Social Security and Medicare.

The stimulus plan temporarily lowered tax rates for salaried workers from 6.2% to 4.2%; and for self-employed persons from 12.4% to 10.4%. Effective January 1, 2012, "regular" tax rates were to return.

That is, until late-December 2011. In one of its last moves of the year, Congress passed a temporary, two-month extension to the payroll tax cut, extending it through February 29, 2012. The expected cost to the U.S. Treasury is $33 billion.

To recoup those costs, Congress has turned to Fannie Mae, Freddie Mac and the FHA.

Each entity has been ordered to collect news fees on each new mortgage is backs, and has been told to forward said fees to U.S. Treasury directly. There's no "workaround" allowed or forgiveness applied -- each new loan is subject to the payment. 

The rules are listed on page 17 of the law's final draft, in a section unambiguously titled "Title IV -- Mortgage Fees and Premiums".

According to the law :

  • Fannie Mae and Freddie Mac must collect an average fee of no less than 10 basis points (0.1%) per new loan
  • The FHA must raise its monthly mortgage insurance premiums 10 basis points for all new loans

The expected cost to consumers is no less than $10 monthly per $100,000 borrowed. Some analysts, however, expect Fannie Mae and Freddie Mac to collect more than is minimally required. This could add an additional $30-50 to your monthly mortgage payment per $100,000 borrowed.

Therefore, if you've been shopping for a home or for mortgage rates in Franklin , take advantage. Within days, lenders are expected to start collecting Payroll Tax Extension fees from mortgage applicants -- a move that will cost you money.

Lock today to avoid the big fees. Save yourself money.

Add Comment

Comments are moderated. Please be patient if your comment does not appear immediately. Thank you.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Comments

  1. No comments. Be the first to comment.

Our BLog

News & Events

Search

Tags

Ask a Question

Contact

Contact Us

Do not fill in this field:

I agree to be contacted by the Benchmark Realty, LLC via call, email, and text. To opt out, you can reply 'stop' at any time or click the unsubscribe link in the emails. Message and data rates may apply. For more information read our Privacy Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.