Uncle Sam Givith and Takith Away!
I have know a number of attorneys over the course of my Real Estate career, and some of them know, and tell the best lawyer jokes. Example:
Do you know how cold it was yesterday?
It was so cold I saw my lawyer walking down the street and he had his hands in his own pockets!
Now try substituting Senator for lawyer and you will be most timely, because last week the U.S. Senate extended the payroll tax cut, reducing what they withhold from folks paychecks. This is a temporary measure to stimulate spending, etc. As part of this extension they included an increase in Mortgage Insurance Premiums (MIP) on Fannie Mae, Freddie Mac and FHA loans, for new purchases and refinances, beginning January 1, 2012. This change will likely be permanent, and represents about a 33% increase in the monthly MIP on 90% of all loans written.
The bill extends for 2 months the payroll tax cut and long term unemployment, as well as Medicare reimbursements for doctors. The House of Representatives is supposed to vote on the bill this week. The increase in MIP is meant to offset the $33 Billion price tag for these programs. For a mortgage amount of $200,000, this increase is about $17 per month. About $204 per year, every year.
All of the homeowners that have weathered the last few years and still own their homes will, if they refinance after January 1, 2012, have a new tax added to their monthly mortgage payment. The same goes for those who buy a new home after January 1st unless they bring a 20% down payment to closing, thus avoiding MIP entirely. In our market I would guess the average home buyer will be paying the extra fees for a while, until the build enough equity to discontinue the MIP.
It may be to late, but you can still try to contact your Representative in Congress, but my guess is they won't vote against the giveaway extensions. But we will end up paying for it, one way or the another!