If you’re considering mortgage refinancing with today’s best mortgage companies to take advantage of low refinance rates, it’s going to become more expensive in a few short weeks. This is because your elected government funded the payroll tax extension with fees on new mortgage loans, including refinance. Here’s what you need to know about the new refinance mortgage fees going into effect late January 2012.
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New Mortgage Fees for 2012
The Tax Relief, Unemployment Insurance Reauthorization Job Creation Act of 2010 was intended to stimulate the economy by lowering payroll taxes. The law reduced your payroll taxes from 6.2% to 4.2%; however, it only did so for one year. In December of 2011 Congress passed an extension to the so called FICA tax holiday through February 2012 with a price tag of 33 billion dollars.
Congress partially funded the tax holiday with new fees for homebuyers and mortgage refinance loans. Congress has instructed Freddie Mac, Fannie Mae and the FHA to increase their loan guarantee fees by 10 basis points without decreasing other fees. The FHA has been further instructed to increase mortgage insurance fees by 10 basis points.
These new mortgage fees amount to approximately $10 more per $100,000 refinanced. If you’re mortgage refinancing with an FHA backed home loan you’ll be required to pay for mortgage insurance and those premiums will be higher (doubled in 20110) due to this legislation. If you live in a high-cost area of the country and have a high-dollar mortgage you could see your payments go up by as much as $70 a month because of these fees.
The Government Wants to Raise Your Mortgage Payment
Refinance mortgage rates have been in near free-fall for several years now and are currently hovering around four percent. The same cannot be said for mortgage fees which have been going up as much as 35% since 2008. Last year the FHA doubled monthly mortgage insurance premiums for all FHA backed home loan and these new fees aren’t the last we’ll see.
The latest round of government-imposed mortgage fees are expected to raise refinance rates by .10 percent; just a drop in the bucket as far as interest rates are concerned. Congress did leave the door open for more mortgage fee hikes, stating that they anticipate the need for more in the coming months.
FHA Streamline Refinance Requirements Changing in 2012
If your current mortgage is an FHA-insured loan the requirements for FHA streamline refinance are also changing. You will be required to meet a five percent savings requirement to qualify. This new change will make scores of homeowners ineligible for the streamline refinance program. Because mortgage insurance premiums are going up by 10 basis points, it will also be more difficult to be eligible for the streamline refinance. If you’ve been procrastinating on your streamline refinance now is the time before fees go up.
New Mortgage Fees Start January 2012
These new government-imposed mortgage fees will be collected starting April 1st of 2012. You could see them sooner due to the amount of time it takes Freddie and Fannie to process your home loan. If you’re considering taking advantage of low refinance mortgage rates now is the time, before these new fees go into effect.
You can learn more about refinancing your home with the best mortgage lenders without unnecessary fees or markup by checking out my free Underground Mortgage Videos.